Flood-insurance costs soar in South Florida. New rates will double, even triple, for many

Flood-insurance costs soar in South Florida. New rates will double, even triple, for many

Brace for a few years of flood-insurance rate hikes, South Florida. And they’re going to be steep — doubling, even tripling, for thousands of homeowners.

FEMA has changed the way it calculates flood-insurance prices. Instead of relying on old flood-zone maps covering broad areas, it’s now basing premium prices on more factors, such as a property’s distance from the ocean, rainfall levels and the cost to rebuild a home.

Last month, for the first time, FEMA shared estimates for what that will mean for the average flood-insurance premium by ZIP code. For the worst-hit ZIP code in South Florida — 33469, a coastal Palm Beach County stretch that covers parts of Jupiter and Tequesta — that will mean a 342% premium increase on average.

In the most expensive ZIP code for flood insurance in South Florida — 33149, which covers Key Biscayne — average premiums will rise north of $7,000 a year.

Some important qualifiers: The premium hikes won’t hit all at once for existing policyholders, and not everyone will see an increase. FEMA estimates that about 20% of Florida policyholders will actually see their premiums drop under the new pricing regime known as Risk Rating 2.0.

For those with current federal flood policies, the good news is that the rate won’t immediately skyrocket. Congress has capped price hikes at 18% per year. The bad news is, you might see that flood-insurance premium go up 18% every year for several years until it reaches the new Risk Rating 2.0 calculation for your home.

If you’re buying a new flood-insurance policy, however, you’ll get hit with the new premium all at once. Since April 2022, new policyholders have had to enroll at the full Risk Rating 2.0 price.

FEMA says the new premiums reflect the reality of Florida’s increasing flood risk as people continue to build homes in flood-prone areas and climate change raises sea levels and makes “rain bomb” events, such as the 1,000-year floods that recently inundated Fort Lauderdale, more common.

The agency also argues that the new premium regime is more fair.

“The new methodology allows FEMA to equitably distribute premiums across all policyholders based on the value of their home and the unique flood risk of their property. Currently, many policyholders with lower-value homes are paying more than they should and policyholders with higher-value homes are paying less than they should,” FEMA wrote in an April 2021 press release announcing the change.

Mortgage lenders and banks often require that home and property owners get federal flood insurance. Although Florida has the highest number of policies in the country, roughly 4 out of 5 Florida homes aren’t covered. Emergency-management experts warn that just about anyone in a state vulnerable to hurricanes and heavy rains should get it.

The number of Florida flood-insurance policies is likely to rise. This year, Florida lawmakers passed a bill requiring anyone with hurricane and wind policies from Citizens Insurance to also get flood insurance. That affects 1.2 million Citizens policyholders in the state.

Across South Florida, the biggest premium hikes will go to policyholders in the Keys, South Miami-Dade and coastal Broward and Palm Beach counties. Rates will remain relatively stable in North Dade and inland Broward and Palm Beach.

The 10 biggest premium hikes in South Florida affect ZIP codes up and down the coastline from Summerland Key to Jupiter — and three ZIP codes in inland Miami-Dade County.

Those hikes will eventually lead to average increases in annual insurance bills as high as $4,056 in ZIP code 33036, which covers Islamorada. But the increases will phase in gradually. In ZIP code 33469, which covers parts of Jupiter and Tequesta, the average policyholder will see eight straight years of 18% insurance hikes before their premiums stabilize at the new Risk Rating 2.0 level.

Under the new risk-rating regime, the highest average premiums in South Florida will all be in ZIP codes in Miami-Dade and Monroe counties. Key Biscayne, Islamorada, Marathon, Miami Beach, North Bay Village, Bal Harbour, Surfside, and Sunny Isles Beach will be among the most expensive areas to insure against flooding in South Florida.

Key Biscayne will have the sixth-highest insurance premiums of any ZIP code in the state.

In Miami-Dade, the biggest premium increases are coming in the southern part of the county, in ZIP codes where home prices are particularly high (33146, i.e. Coral Gables) or where premiums have been historically low (33033, i.e. Leisure City and 33170, which runs west from Goulds to the Everglades).

In Broward, the biggest premium increases are concentrated on the coast, especially in ZIP codes surrounding Fort Lauderdale. ZIP code 33315, which covers Edgewood, one of the worst-hit neighborhoods in the Fort Lauderdale floods, will see a relatively modest 64% premium hike. But a few miles north in ZIP code 33305, premiums are expected to double on average.

This climate report is funded by Florida International University, the Knight Foundation and the David and Christina Martin Family Foundation in partnership with Journalism Funding Partners. The Miami Herald retains editorial control of all content.