My Flood Status Q and A: Risk Rating 2.0
August 1, 2022 MLS Updates
Starting April 1st, all National Flood Insurance Program (NFIP) policies will be priced under Risk Rating 2.0 upon their next renewal. The Risk Rating 2.0 pricing methodology for calculating flood insurance rates has caused some confusion for homeowners and real estate agents alike. This is why the latest client Q&A is very important for every real estate professional.
I've heard from insurance agents that FEMA is eliminating the flood zone letter designations such as AE and X. Instead, they will determine the distance of a property to the nearest body of water and price insurance quotes accordingly. I've also been told that Elevation Certificates will not be considered in the future in determining the cost of a homeowner's flood insurance. Is this accurate?
The FEMA Flood Zones are not changing or going away. The Flood Insurance Rate Maps (FIRMs), flood zone designations, and Base Flood Elevation (BFE) remain the guiding factors for determining whether mandatory flood insurance requirements apply.
If flood insurance is required, either by law or by the lender, the new FEMA pricing method called Risk Rating 2.0 will be used to determine the rate. This new flood insurance rating methodology is where other variables like distance to water, et al, will be used versus Flood Zone and BFE.
While Elevation Certificates (ECs) might play less of a role in reducing flood insurance rates, they will still be referenced when challenging a flood zone status to remove flood insurance requirements altogether.
How You & MVMLS Can Help
Agents can help their clients understand the difference between ‘Requirement vs Rate’ with this document. In addition, MVMLS has partnered with MyFloodStatus which allows members to get a Flood Zone Determination report for the discounted price of $25 or join their Gold Membership and get up to 10 reports a month for only $25.