Flood Insurance: What You Need to Know

Is your property more likely to flood or not to flood? That is the overriding question when it comes to flood coverage and FEMA is attempting to answer it as accurately as possible. Whether your property has been designated in the past as being within a high hazard flood zone or not, changes are underway that could affect the insurance requirements of your business or residence. Read below as we discuss why this is happening, what this means for you, and what your coverage options are.


FEMA is using what they’ve deemed “Risk Rating 2.0” as a means to deduce fair and equitable rates across the board to property owners. Since 2021, this Risk Rating has combined such factors as data sets from the private sector, catastrophe models and actuarial science to determine rates.

Much thought has been given to this rating, with the intended results being rate increases and decreases are as transparent as possible. Elements that are considered within the data set include: frequency of flood, flood type and the common risk many property owners cite as an obvious reason for flood possibility – proximity to a body of water.

Why don’t you want a lapse in coverage?

A lapse will trigger additional consequences including a new application with a 30-day waiting period and the loss of glide path, which has a maximum year-over-year rate increase cap.

Glide path provides a discount from paying full risk rates.

  1. The benefit to glide path is that it provides the policyholder with a maximum year-over-year rate increase cap until the premium reaches full risk rates.
  2. This is significant, as the policyholder may experience a huge premium spike if they suffer a lapse in coverage.
  3. Example – The 2.0 renewal offer is $688. Payment is received by the insurance company after the grace period (29 days), or insufficient funds are received. The premium without glide path is now in excess of $4,000.

Helpful tips include:

  1. Consider using Certified Mail when sending premium payments. The certified mail date is used as the premium receipt date, which ensures the earliest receipt date possible. You can also track your payment from the post office to the remittance center at: www.usps.com/shipping/trackandconfirm.htm.
  2. Premium payment must be received by the insurance company, not the agent/insurance agency.
  3. If the premium payment is mortgage billed, be certain the lender remits payment on time. The grace period to avoid a lapse in coverage applies is regardless of being lender or insured paid. If the lender is late with an escrow payment, there is no recourse provided to the policyholder. Be certain the lender information shown on your policy is current.

More information regarding Risk Rating 2.0 can be found on the FEMA link: https://www.fema.gov/flood-insurance/risk-rating


Changes in premium are also happening due to remapping. These map changes are not just topographical; they potentially shift flood zones. Florida is currently being reviewed and remapped by FEMA. That means possible changes to flood insurance requirements for many homeowners are on the horizon, if not already in effect. FEMA carefully considers the risk profile of different areas; therefore, your home may be designated at a lower or higher risk of flood than previously indicated. Read further about remapping.


Whether you select coverage through the National Flood Insurance Program (NFIP) or Private Market Flood coverage depends on your individual situation. Unlike the NFIP, Private Market Flood has no waiting period (the waiting period for NFIP is thirty days).

Look for additional important information from your flood insurance company, which accompanies your renewal offer, and call your W3 advisor with any further questions.