Floods are the most common natural disaster in the United States.
Flood insurance, however, is unique.
Most policies are sold and backed by the federal government, andhomeowners insurancegenerally doesnt cover flood damage.
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But that valuable protection comes at a cost: roughly$888on average nationwide in 2023.
Heres how much flood insurance costs now along with ways to save money in the future.
When Insurance Falls Short…
Unfortunately, insurance doesnt covereverything.These resourcescan help you manage those unexpected expenses.
What Is Flood Insurance?
Standard home insurance doesnt cover that kind of damage.
Many banks also require flood insurance in high-risk zones.
Your specific flood insurance cost will depend on many factors, including your homes location, size and elevation.
Flood insurance premiums include the federal policy fee that policyholders pay to renew or purchase a policy.
Policy details also help determine flood insurance costs.
FEMAs flood insurance rate maps use different codes to designate an areas flood risk.
Zones beginning with the letter A or V including AE or V1 are considered hazard areas.
Zones beginning with the letters B, C or X are low- or moderate-risk areas.
Home Construction
How your home is built also factors into your flood insurance costs.
Some building characteristics that impact your flood risk:
3.
Coverage Types and Amounts
The more coverage you need, the more your flood insurance will cost.
Renters can purchase personal property-only coverage to insure their belongings.
Remember: Your mortgage company may require you to purchase a certain amount of building and contents coverage.
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A deductible is the amount you pay out-of-pocket before flood insurance picks up the rest.
Is Flood Insurance Getting More Expensive?
In the past, flood maps were the primary tool used to calculate someones flood insurance premiums.
It was fully implemented on April 1, 2023.
FEMA isnt allowed to raise flood insurance rates by more than 18% per year.
This includes non-primary residences, properties with substantial cumulative damage and those that sustained substantial damage since 2012.
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Unfortunately, theres no quick fix and you may need to make a sizable upfront investment to your property.
FEMA recommends improvements likeelevatingutilities, installing flood openings, filling in basements and elevating your property.
It might also be included in your property deed.
But be warned: This money saving trick is risky.
And lower coverage amounts may not adequately protect your home or belongings.
The CRS is a voluntary program that incentivizes communities to implement stronger flood protection measures.
Discounts on flood insurance premiums through this program range from 5% up to 45%.
Who Needs Flood Insurance?
When Is Flood Insurance Required?
Property in high-risk flood areas with government-backed mortgages are required to have flood insurance.
Your bank may also require it.
Even if youre not required to purchase flood insurance, its worth considering.
What Does Flood Insurance Cover?
There are two types of NFIP coverage building coverage and contents coverage.
What building coverage insures:
What contents coverage insures:
What Isnt Covered by Flood Insurance?
Flood insurance doesnt cover all types of flood damage.
Flooding that originates inside your property like a burst pipe is usually covered by your homeowners insurance policy.
FEMA flood insurance isnt your only option.
You might be able to buy flood insurance from a private insurer to replace or supplement your federal coverage.
Private flood insurance refers to policies that arent underwritten and backed by the federal government.
However, private flood insurance may be a good option for some people, especially those with high-value homes.
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Listen, we know its tough out there.
But theres no shame in asking for help.
These companiesmake it easy to help yourself and your bank account.
To get private flood insurance, youll need to contact different companies directly.
Some major companies include Neptune, Chubb and Aon Edge.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
