{"id":4779,"date":"2021-02-22T15:07:08","date_gmt":"2021-02-22T21:07:08","guid":{"rendered":"https:\/\/nwfl4sale.com\/flood-insurance-data-report-finds-many-policies-may-be-underpriced\/"},"modified":"2021-02-22T15:07:08","modified_gmt":"2021-02-22T21:07:08","slug":"flood-insurance-data-report-finds-many-policies-may-be-underpriced","status":"publish","type":"post","link":"https:\/\/nwfl4sale.com\/flood-insurance-data-report-finds-many-policies-may-be-underpriced\/","title":{"rendered":"Flood Insurance\u00a0Data Report Finds Many Policies May Be Underpriced"},"content":{"rendered":"
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The firm responsible for flood-risk estimates on realtor.com concluded that many current flood policies don\u2019t charge enough to cover actual risk. Their data could become even more important in 7 months when FEMA starts quoting individualized prices for flood policies.<\/span><\/span><\/p>\n<\/div>\n MIAMI \u2013 If you live in Florida, you should probably be paying more for flood insurance. And you likely will be soon. That first finding is the conclusion of a new analysis by First Street Foundation<\/a>, a nonprofit research group focused on climate impacts on property value, which found that the majority of Floridians face a higher flood risk than their insurance costs would indicate.<\/span><\/span><\/p>\n The second prediction comes because the National Flood Insurance Program (NFIP) is rolling out a new way of pricing flood insurance later this year. Experts expect it will lead to higher rates for homeowners in flood-prone places like Florida. Potentially, a lot higher in some places.<\/span><\/span><\/p>\n For example, the average premium in the city of Miami is $1,069 a year, by First Street\u2019s calculations. The \u201cproper\u201d price, the nonprofit found, is around $1,500.<\/span><\/span><\/p>\n In some cities, like Miami Beach, the calculations show flood risks are currently wildly underpriced. It would take nearly a tenfold leap from the average price to bring it in line with risks \u2013 which adds up to a $20,000 annual premium. In lucky others, like South Miami, the research actually showed a 16% decrease, indicating that residents are perhaps overpaying for their risk.<\/span><\/span><\/p>\n The First Street analysis is among the first to estimate how much higher premiums could rise, although FEMA \u2013 which will set rates for the national flood program \u2013 stresses it is \u201cpremature\u201d to compare the study to its yet-to-be-released new rate formula.<\/span><\/span><\/p>\n Nationally, First Street found about 4.2 million properties facing major flood risk, and those properties would need to pay about four and a half times more than the NFIP charges to cover that risk. About one in four of those properties are in Florida.<\/span><\/span><\/p>\n This research backs up what experts have been saying for decades: The NFIP undercharges for flood insurance, which makes it cheaper and easier for people to live in dangerous places. That\u2019s a problem worsened by the climate change-driven sea level rise that makes coastal spots riskier every year.<\/span><\/span><\/p>\n Floridians are used to sticker shock over home insurance, with much of it coming because of the high cost of windstorm hurricane insurance, a category of coverage largely abandoned by large insurers years ago. The $1,960 average premium is the second-highest in the nation. But flood insurance has always been far cheaper \u2013 at a national average of around $800. That could change soon.<\/span><\/span><\/p>\n The First Street analysis shows that to get out of the red, the NFIP will have to charge a lot more. And that trend only continues as seas rise. The analysis found the costs of insuring those same areas in 30 years could be double or more in many places, including South Florida.<\/span><\/span><\/p>\n Because of new federal caps, massive rate hikes will not all come in one year, but industry analysts say homeowners may face years of consecutive increases to bring the cost in line with projected risk \u2013 not unlike what has happened with windstorm rates. Ultimately, it may also impact property values and not in a good way.<\/span><\/span><\/p>\n