Statutory limits on annual rate increases - Federal law places statutory limits on NFIP flood insurance rate increases. Due to federal law, most rates for NFIP flood insurance cannot increase more than 18% per year. These statutory caps on annual individual rate increases do not change under Risk Rating 2.0.
Mandatory flood insurance purchase requirement - Mandates associated with federally-backed funding in the form of loans or FEMA flood assistance grants remain.
Structures with federally-backed mortgages and are located in Special Flood Hazard Areas mapped by FEMA's Flood Insurance Rate Maps (FIRMs) will continue to be required to have flood insurance for the life of the loan.
Any structure with a Small Business Administration loan, regardless of location, will continue to be required to have flood insurance for the life of the loan.
Structures located in Special Flood Hazard Areas mapped by FEMA's FIRMs and have received FEMA flood assistance grants must have flood insurance maintained in perpetuity, regardless of change in ownership. The policy, if with NFIP, can be transferred to the new owner(s).
Policy Coverage - The maximum coverage under NFIP flood insurance policies on buildings/contents and Increased Cost of Compliance (ICC) do not change under Risk Rating 2.0. Policyholders should ask their insurance agent for the coverage applicable to their structure.
Fees and surcharges on policies - The fees and surcharges that have always been applied to NFIP policies do not change under Risk Rating 2.0: Reserve Fund Assessment; Flood Insurance Affordability Act of 2014 (HFIAA) Surcharge; Federal Policy Fee; and Probation Surcharge (applies only to communities FEMA has placed on probation for violation of NFIP requirements).
Flood insurance discounts - FEMA will continue to offer premium discounts for:
Pre-FIRM subsidized structures. In Unincorporated Los Angeles County, these are structures that were built prior to 1980. The policy on such a structure continues to transition (at no more than 18% annually) towards its true risk (actuarial) rate. Policyholders will still be able to transfer their discounts to a new owner by assigning their flood insurance policy when their property changes ownership. Note: If the policyholder allows the policy to lapse more than 30 days, they will lose their discount.
Structures newly mapped into Special Flood Hazard Areas (SFHA). Structures that are newly mapped into a SFHA will receive a 70% discount on the first $35,000 of building coverage for the first year. After, the policy will be on a glidepath at no more than 15% annually to their full-risk rate. Policyholders will still be able to transfer their discounts to a new owner by assigning their flood insurance policy when their property changes ownership. Note: If the policyholder allows the policy to lapse more than 30 days, they will lose their discount.
Community Rating System (CRS) discounts - Discounts to policyholders in communities who participate in the NFIP's Community Rating System will continue. Communities earn the NFIP rate discounts based on their Community Rating System classification.
Unincorporated Los Angeles County is a CRS Community. Los Angeles County’s current CRS Class 7 rating yields a 15% discount on NFIP flood insurance policies in unincorporated areas. As of April 1, 2022, Los Angeles County will have a CRS Class 6 rating, which will yield a total 20% discount on NFIP flood insurance policies in unincorporated areas. The CRS discount will only be applied to the actuarial rates. Existing policyholders will be on a glidepath to their full-risk (actuarial) rates with an increase of no more than 18% annually. Once the full-risk rate is reached, the CRS discount will be reflected in the premium.
Since Risk Rating 2.0 does not use the flood zones mapped in FEMA's FIRMs to determine actuarial flood risk, as of October 1, 2021, the discount is uniformly applied to all full risk rate policies, regardless of whether the structure is inside or outside of a FEMA-mapped Special Flood Hazard Area.