Flood insurance prices going down for most Utahns but up for most Americans, study finds
SALT LAKE CITY — Utah has seen some big floods in places that don’t typically flood.
For example, last August, expensive Salt Lake City homes, that are not in a “flood zone,” ended up with water in the basement after a massive storm overwhelmed the city drainage system.
Unique storms are becoming less unique around the country, and now, the federal agency that sells flood insurance is adapting.
On Oct. 1, 2021, FEMA is launching what it calls “Risk Rating 2.0.”
The goal is to make pricing more equitable.
“You are having some places, specifically like Utah, that are paying more money for flood insurance than they should be,” said Nick VinZant with LendingTree’s QuoteWizard.
VinZant has been analyzing what the change will mean for the price consumers pay, and he shared his data with the KSL Investigators.
Right now, the average cost of flood insurance in Utah is $730 per year.
Next month, 53% of policyholders will see a price decrease and 47% will see their costs go up — some as much as $20 per month — according to the data.
Nationally, the cost is going to go up for 77% of flood insurance policies.
Until now, how much a homeowner has to pay for flood insurance has been based almost exclusively on FEMA flood maps that try to predict how likely your home is to flood.
Going forward, FEMA will factor in whether a home has actually flooded. If it has, that home would be considered a higher risk.
“The more flood risk someone is facing, they’re going to be paying higher prices, rather than everybody kind of balancing things out across the board,” said VinZant.
Perhaps the biggest change is that FEMA will now factor in the value of a home when deciding how much to charge for flood insurance.
“Lower value homes and neighborhoods are going to be paying less, and higher value homes and neighborhoods are going to be paying much more,” said VinZant.
A standard homeowner’s insurance policy does not cover flooding.
Most Americans do not have flood insurance. In a 2020 poll by the Insurance Information Institute, only 27% of people who have homeowner’s insurance said they had a flood insurance policy. That’s up from 13% in 2018.