When FEMA released its Risk Rating 2.0 methodology in October 2021, thousands of homeowners in low-elevation coastal areas of the United States braced for federal flood insurance hikes.
Recently released data from the agency shows that annual flood insurance premiums will eventually double or even triple for homeowners in some zip codes, though most homeowners with flood insurance in America will pay less than they currently do.
Congress has capped annual hikes at 18%, so it will take years for affected homeowners to hit the full rate. But for the past year, FEMA has required new policies to be rated under the Risk Rating 2.0 methodology, meaning they pay full price immediately.
The data shows that the hardest hit homeowners are predominantly in South Florida, though sections of Louisiana, Kentucky, Ohio and Texas will see double or triple digit increases as well.
In Palm Beach County’s Jupiter Inlet, flood insurance will increase by an average of 342% to $3,449, according to the Miami Herald, which analyzed the FEMA data. That’s the highest rate increase in the state.
In the posh island town of Key Biscayne, homeowners will see rates climb as high as $7,096 annually on average, up 107% from the current $3,423 average cost of flood insurance. In Miami-Dade, three zip codes will see average premium hikes north of 200%, with average premiums going up more than $1,500 for homeowners. The average flood insurance premium under Risk Rating 2.0 will eventually be over $7,000 a year in Miami-Dade.
Just outside of hurricane-prone New Orleans, homeowners in Gretna, Louisiana will see annual flood insurance premiums increase to $3,023 a year from $1,139, according to FEMA. In Houma, 50 miles southeast of the Big Easy, the average premium will increase to $3,511 a year from $982.
In fact, most zip codes in the Southeast under Risk Rating 2.0 will see an increase in annual premiums, according to the Miami Herald’s data analysis.
More than any region, the Southeast has benefited from changing migratory patterns brought on by the COVID-19 pandemic. Florida’s population in particular grew by 706,597 people since the 2020 Census, and the Miami-Dade metro’s real estate market has boomed. Florida metro areas are among the fastest-appreciating U.S. housing markets, recording some of the highest year-over-year growth in March, as measured by the CoreLogic Home Price Index.
The Miami metro experienced nearly five times the U.S. home price appreciation rate, posting a 15% annual increase in March 2023 compared with the national growth rate of about 3%, according to CoreLogic.
It also contains some of the riskiest real estate in the country from a climate perspective.