There are many factors that can affect how flood insurance is priced, which can range from frighteningly expensive to downright cheap. While flood insurance premium costs depend mostly on a property’s risk level according to government mapping data, there are other factors that can contribute to the pricing of a flood insurance policy.
There are three primary categories of risk that your home or business will fall under that will help dictate the cost of a flood insurance policy:
- Moderate-to-low risk areas (Non-Special Flood Hazard Area or NFSA): This is typically the least expensive flood insurance policy because your risk of a flooding event is considered low. Property owners in this category submit more than 20 percent of all claims to the National Flood Insurance Program (NFIP), which is a federal program created in 1968 that offers flood insurance to homeowners, renters and business owners. The insurance is sold through independent agents, like InsuraMatch.
- High-risk areas (Special Flood Hazard Area or SFHA): If you fall into this category, flood insurance costs will most likely be set higher. This is because the Federal Emergency Management Agency (FEMA) has determined there is at least a one in four chance of flood damage occurring during a 30-year mortgage.
- Undetermined-risk area: This simply means that there is no flood-hazard analysis done in these areas, which appear with a Letter D on a flood map.
There are other factors involved in determining what a flood insurance policy costs. When speaking to an agent, he or she will most likely ask you about the amount of coverage you would like to buy to cover structural damage and/or content loss. As with any insurance, the more coverage you want or need will affect pricing. You may also need to acquire a flood elevation certificate to determine the elevation of your home in relation to the base flood elevation level, which is the level FEMA estimates that floodwaters may rise. Other factors include where your major utility and appliances are located and if your property has undergone any renovation that may mitigate flooding damage.
The average cost of a flood insurance policy is $700 per year, but that can be misleading. If you’re in a low-risk area and need minimal coverage levels, your cost will most likely be much less. The opposite is true if your property is a high-risk zone and has a higher value.
Find out how much a flood insurance policy would cost for your home. Call an InsuraMatch advisor today at (844) 300-3367 or request a quote online:
There are several ways to reduce flood insurance premiums. First, check to see if your community is part of the NFIP’s Community Rating System (CRS). This is a voluntary incentive program that promotes community floodplain management work that exceeds minimum NFIP requirements, according to NFIP. This reduces a community’s overall flood risk and potential damage to your property, thereby reducing cost.
There are also a number of steps you can take to reduce your property’s flood risk. These steps include: elevating utilities and living areas, providing foundation openings and even relocating your structures. See our guide on how to reduce flood insurance costs.
What does flood insurance cover?
Your typical homeowners or renters policy will cover certain water related damage, such as an ice dam that causes water damage to your roof or ceiling, or a burst pipe.
Flood insurance covers your foundation and equipment that supports the structure, such as a furnace, water heater or circuit breaker. There are two types of coverage: building and contents coverage. Building coverage will replace items such as your furnace and hot water heater while contents coverage will handle your washer and dryer or freezer, according to floodsmart.gov.
The NFIP will cover up to $250,000 for the structure of your home and $100,000 for personal property. The policies cover replacement cost coverage for the structure and actual cash value for your possessions. It’s available to homeowners and renters.
This video explains what is covered and what isn't:
Questions to ask your flood insurance agent
Unless you carry a mortgage and live in a high-risk flood zone, you are under no obligation to purchase a flood insurance policy. However, many people voluntarily purchase a flood insurance policy to offset potential losses. Floods are the most common type of disaster in the United States, according to FEMA. Hurricanes and tropical storms cause flooding damage that can far exceed wind damage and Nor’easters and extra tropical cyclones frequently result in flood and storm surge.
To get a detailed estimate on what a policy will cost you, you’ll need to talk to a licensed insurance agent. You can talk to one of our expert insurance advisors at (844) 300-3367. Here are some important questions to ask:
- Which flood zone is my property located in? What is my risk of a flooding event?
- Am I required to have flood insurance for my property?
- Do I qualify for a Preferred Risk Policy?
- Is my community part of the Community Rating System?
- What is and isn’t covered in a flood policy?
- Will the flood insurance policy be backed by the federal government?
- What can I do to reduce my premium?
- Will is the difference between Replacement Cost Value or Actual Cash Value and what will my policy provide?
- How do I make a flood claim?
- What is the policy renewal process?
Our insurance advisors will also help you evaluate how much coverage you may need. In many cases, your contents coverage needs may be significantly less than structural coverage. Don't wait for big storm to approach, call an advisor today to talk through your flood insurance needs and options.
Find out how much flood insurance costs in your area by calling one of our expert insurance advisors at (844) 300-3367 today.
Visiting our site after hours? Request a flood insurance quote online now: