Roughly 90 percent of FEMA policyholders in Florida are experiencing flood insurance price increases—a higher portion than all but Texas and above the national average of 81%, according to a new report from Redfin.
Nearly 3 million owners of single-family homes in the U.S. are seeing their flood-insurance premiums rise as a result of FEMA overhauling the way it measures risk, with the changes starting to take effect.
The cost increase is hitting flood-prone Florida at a time when the state is seeing its populations swell due to pandemic-driven migration. Domestic migrators moving to The Sunshine State soared in popularity as remote work and surging home prices have prompted Americans to seek out more affordable cost of living areas.
“Most policyholders probably won’t feel the burn of FEMA’s price hikes in year one, but by year five or ten, the elevated cost of flood insurance could impact where Americans decide to buy and build homes,” said Redfin Senior Economist Sheharyar Bokhari. “Some people may choose not to renew their flood insurance policies despite increasing flood risk due to climate change, especially as inflation drives prices up elsewhere in the economy as well. Others may just move to less risky places where flood insurance isn’t required.”
Nationwide, over three-quarters (81 percent) of single-family home policyholders are set to see their flood-insurance premiums rise, starting April 1. The remaining 19 percent are seeing decreases. Of the policyholders experiencing increases, most (88 percent) are seeing annual premiums rise by up to $120, while 9 percent are facing increases of $120 to $240, and 4 percent are seeing jumps of $240 or more.
In general, areas with higher home prices are seeing a larger share of policyholders face premium increases. When FEMA announced its new methodology, it said one of its goals was to “equitably distribute premiums across all policyholders based on the value of their home and the unique flood risk of their property.”
The agency said that many policyholders with lower-value homes have been paying more than they should and policyholders with higher-value homes have been paying less than they should.
Six states are seeing increases are seeing the cost of insurance premiums rise faster than the rest of the nation, all of which face substantial flood risk. In Texas, 89 percent of policyholders are seeing premiums rise. Florida follows closely behind at 88 percent, while Mississippi (87 percent), Alabama (85 percent), West Virginia (84 percent), and Louisiana (83 percent) round out the list.