New Federal Flood Insurance Rates Mean Changes for Tennessee Flood Insurance Policyholders

Agency Expects 28% of Tennessee Policyholders Will See Decrease in Premium
Thursday, June 24, 2021 | 09:32am

NASHVILLE — The Tennessee Department of Commerce & Insurance (TDCI) is raising awareness of recent changes to the National Flood Insurance Program (NFIP) that will mean lower flood insurance premiums for some Tennessee flood insurance consumers.

The Federal Emergency Management Agency (FEMA) recently unveiled a new way of calculating flood risk called Risk Rating 2.0 that the agency said will create flood insurance rates that are more actuarily sound, equitable, easier to understand and better reflect a property’s flood risk. Flood insurance covers the damages a home might sustain during a naturally occurring flood which a traditional homeowners policy does not cover.

In Tennessee, there are 27,500 NFIP policies in place while 2.5 million properties are without NFIP coverage leaving homeowners to pay for repairs and rely on federal financial assistance in the event of a flood. FEMA says the changes from Risk Rating 2.0 in Tennessee will mean:

  • 28% of Tennessee flood insurance policy holders (7,581 policies) will see immediate premium decreases;
  • 59% (16,316 policies) will see premium increases of $0-$10/month on average (which is around the current national average);
  • 8% (2,162 policies) will see premium increases of $10-20/month on average;
  • 5% (1,448 policies) will see premium increases of $20 or more per month on average                                                     

FEMA reports that the national average annual premium for a single-family home is now $920. The average annual premium would fall to $815.

“While flood insurance cannot stop a flood, it can save homeowners from financial catastrophe,” said TDCI Assistant Commissioner Bill Huddleston. “On the heels of flooding that affected thousands of Middle Tennessee residents in March, I urge more Tennesseans across the Volunteer State to learn how flood insurance is an important tool in preparing for a flood and remaining resilient after a disaster.”

Additionally, the agency’s new ratings should help insurance producers more easily sell policies. Risk Rating 2.0 will provide greater transparency to policyholders to better understand their property’s flood risk and how it is reflected in their cost of insurance. This will also eliminate the longstanding problem of people going to multiple insurance agents and getting different rate quotes for a property. Insurance producers can learn more about selling flood insurance at

The new rate schedule takes effect Oct. 1, 2021 for new policyholders but not until April 1, 2022 for renewal of existing policies.

To assist consumers who might have concerns or questions before purchasing flood insurance, TDCI has created a list of frequently asked questions (FAQ) devoted to educating consumers about flood insurance. 

What is the cost of flooding? Flooding can be an emotionally and financially devastating event. Just one inch of water in a home can cause upwards of $25,000 in damages. In the last 10 years, flooding cost the U.S. $40.3 billion in damages. Flood insurance can help you recover faster. To calculate your potential losses, visit NFIP flood cost calculator.

What does flood insurance cover? An NFIP policy covers direct physical losses to your structure and belongings. To protect your home and belongings, the NFIP offers two types of coverage: Building coverage and contents coverage.

What isn’t covered by flood insurance? Flood insurance covers losses directly caused by flooding. For example, damage caused by a sewer backup is covered if the sewer backup is a direct result of flooding. If the sewer backup is not caused directly by flooding, the damage is not covered.

Isn’t flood insurance expensive? Compared to the cost of flood damage, the cost of flood insurance is a drop in the bucket. In 2019 nationally, the average flood insurance claim payment was $53,301.

Won’t federal assistance cover my losses if my home is flooded? Only when a flood is big enough and the damages high enough will a state request a presidential disaster declaration and the declaration has to then be granted by the request from the federal government. Even in the event of a disaster declaration, you might not qualify for federal assistance and, if you do, it may not be enough to cover the costs of rebuilding a home in the aftermath of a flood.

Can homeowners who have been flooded buy flood insurance? Yes. If your community participates in the NFIP, you are eligible to buy flood insurance, regardless of flood history.

How do I purchase flood insurance? Contact your insurance provider today and ask if they participate in the NFIP. If you do not have an insurance company or if your insurance agent does not sell flood insurance, utilize the NFIP insurance provider locator to find a provider near you.

Can I buy flood insurance after a flood to cover my losses? No. Flood insurance policies do not work retroactively.

If I buy flood insurance, can I immediately get coverage? While you can purchase flood insurance at any time, NFIP policies usually have a 30-day waiting period before the policy takes effect. If you purchase a private flood policy, be sure to ask about the waiting period.

If my community does not participate in the NFIP, can I still purchase flood insurance? Yes. There are a few areas in Tennessee that do not participate in the NFIP. If your community does not participate, FEMA assistance is not available. If flood insurance through the NFIP is not available in your area, contact your licensed insurance agent to ask about private flood insurance. If you choose a private flood insurance policy, be sure to shop around to compare premiums and coverage. 

For more information about flood insurance, visit To contact the NFIP, call 800-427-4661.

Tennessee consumers who have questions about filing a claim or about their insurance policy can contact TDCI’s team at (615) 741-2218 or 800-342-4029. Consumers may visit our website for additional information or to file a complaint online regarding potential disputes with their insurance carrier.