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Flood Insurance to Increase for Majority of Cape and Islanders

Eve Zuckoff

Flood insurance rates are changing for thousands of Massachusetts residents, with premiums rising for nearly two-thirds of Cape and Island property owners, in an effort to make the National Flood Insurance Program more equitable.

According to new data released by the Federal Emergency Management Agency, 54 percent of Cape and Islanders insured through the National Flood Insurance Program will see increases of up to $10 per month, or $120 all at once. Another 6 percent will see increases of up to $20 per month, or $240 all at once, and roughly 4 percent will see increases of more than $20 a month.

About 35 percent of locals will see their bills decrease.

Cost changes per month by zip code
Federal Emergency Management Agency/ Cape Cod Cooperative Extension
Cost changes per month by zip code

Properties that will see the largest increases in rates are expected to be those with the highest values.

“There is a very small number of policyholders that will see really significant increases. Those are likely to be the high-value homes that are very close to the water,” said Shannon Hulst, a flood plain specialist for Cape Cod through Barnstable County's Cape Cod Cooperative Extension and Woods Hole Sea Grant.

“The smaller homes, folks that have inherited homes here, who've lived here for decades … those folks are more likely to be in the other categories of either decreasing or increasing only $10 a month,” Hulst added.

Supporters of the change say it will not only reflect the real, rising risks of climate change, but that it will make the system more fair. Under current practices, federal flood insurance rates are based on the flood zone where a home is located, but those zones can spread across large geographic areas.

“It can be that somebody who's pretty far back from the source of flooding is going to have the same ‘risk' (under the old system) as somebody who is right on the coast because they're in the same flood zone. And that is not an accurate depiction of flood risk,” Hulst said. “So what this does is change it so that every single structure has its own flood risk.”

Now, homes will be evaluated based on factors including the home’s elevation and how far it's located from the source of flooding.

“[Federal program managers are] also taking into account the value of the structure, so that basically they're not charging the same for a house that would cost a million dollars to rebuild versus a house that would cost $100,000 to rebuild,” she said.

FEMA officials have released cost changes per month by zip code. No individual town or area will experience across-the-board increases or decreases, but federal officials have not pinpointed which individual houses will be affected. Still, some trends are already becoming clear.

“The whole Northeast has the highest percentage of policies that are increasing that top tier, more than $20 (per month),” Hulst said. “It's the Northeast, plus the Appalachian corridor and then a little bit of the Midwest, which is a little bit unexpected.”

The National Flood Insurance Program insures 3.4 million single-family homes around the country, and the change, according to Hulst, will incorporate the latest data and make the system more consistent with the private market, which insures just a fraction of local residents.

“Overall this is going to be a good change,” she said. “Having the more accurate data go into the rating of an insurance policy is always a good thing. The result is going to be that the homeowner —or whoever the policyholder is — is going to have a better understanding of what their real risk is. That wasn't really well conveyed with the previous rating system.”

It’s not yet clear, however, whether the policy change will deter new homebuyers from considering coastal properties. Hulst hasn’t yet heard from anyone who says they cannot afford their changing rate.

Most homeowners won’t see changed rates right away; they’ll be phased in over a six-month period that begins Saturday, Oct. 1.

“Based on the age of the house, based on how long they've had flood insurance coverage, based on a few different factors, they're going to see those rates increase at different levels and over time,” Hulst said. “But eventually everyone will get to their full risk rate, which is the accurate number for what their flood risk is.”

Eve Zuckoff covers the environment and human impacts of climate change for CAI.