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Flood Insurance: Cost and Information

By July 15, 2021September 29th, 2021Flood

Floods can be an overwhelming experience—both financially and emotionally. And, according to the Federal Emergency Management Agency (FEMA), they are the most common natural disaster in the U.S. and are second only to wildfires in the amount of damage they inflict.

Between 1980 and 2013, the country suffered through over $260 billion in flood-related damages, and FEMA predicts that climate change will only increase flooding risks in future years. One recent estimate indicated that a 2,000-square-foot home with 12 inches of water damage could cost $50,000 to repair.

Without flood insurance, it’s up to the affected residents to either pay from personal savings or take out loans to repair the damage or replace destroyed items. With flood insurance, it’s possible to recover quickly and more completely. It’s up to you to answer the critical question:

 

  • Do I need flood insurance?
  • How do I get flood insurance?
  • How much will I pay for flood insurance?
  • What is the cost of flood insurance in Florida?

 

Do I need flood insurance?

Too many residents are relying on their homeowner’s insurance to protect them from unexpected disasters. What they don’t realize—until it’s too late—is that nearly all home insurance policies do not cover flood damage.

If you live in a high-risk flood zone, you should consider taking out a flood insurance policy. Even if you don’t live in one of the high-risk areas, it still makes sense to have the coverage since about 25% of all flood insurance claims are made by homeowners living in low-to- moderate flood risk areas.

If you took out a mortgage for your home from a federally regulated or insured lender and the house is in a high-risk zone, it was mandated that you purchase flood insurance on your property.

If you’re debating whether you need the insurance, keep this in mind: a FEMA disaster grant reimburses about $5,000 per household on average, but the average flood insurance claim is nearly $30,000!

 

How do I get flood insurance? ​

National Flood Insurance Program (NFIP) policies can be purchased through thousands of insurance agents throughout the country, including White Cloud Insurance. When you buy NFIP flood insurance, your deductible and premium will be governed by NFIP standards. NFIP policies can include discounts of up to 40% off flood insurance premiums, depending on the building and contents deductibles you choose.

 

NFIP flood insurance deductible requirements 

For example, if you live in a single-family home located in a high-risk flood zone, the NFIP flood insurance deductible requirements come into play. NFIP has a minimum deductible of $1,000 for policies with $100,000 or less in building coverage and $1,250 for policies with $100,000 or more in coverage. Discount rates will vary depending on the deductible you choose, and they range from 0% for a $1,000 deductible to 40% for a $10,000 deductible, which is the maximum deductible for NFIP flood insurance.

As with any insurance, increasing your deductible yields a more significant premium discount, but NFIP flood insurance deductible options may be limited if your property isn’t in a high-risk area. Residents in low-to-moderate flood risk areas could qualify for a less expensive type of NFIP insurance known as a Preferred Risk Policy, which comes with a lower premium.

These are the necessary details of flood insurance, but what’s the bottom line?

Named Peril policies cover the damages caused by disasters listed in the policy contract. Open peril policies, on the other hand, cover everything except the perils excluded in the policy.

So, what will homeowners insurance cover and what will it not? Theft, weather, and fire are the most common perils included in homeowners’ insurance policies. However, the policy will not cover all weather related damages or any loss due to theft.

 

How much will I pay for flood insurance?

NFIP flood insurance rates do not vary from company to company. Your premium will be based on several factors. Here are the top seven:

  1. The year the house was built
  2. The building’s occupancy
  3. The number of floors
  4. Location of the contents
  5. Flood risk
  6. Location of the lowest floor in relation to the Base Flood Elevation on the

flood map

  1. Deductible and amount of building and contents coverage

In 2019, the average price for flood insurance obtained through NFIP has been $699 annually. Keep in mind, however, that the cost of an individual flood policy will be determined by how much coverage you’re requesting and how close you are to the nearest body of water. Here are some examples of flood insurance rates in the country:

 

What is the cost of flood insurance in Florida?

Even though a mortgage company might not require it, purchasing flood insurance in Florida is an excellent decision because of the state’s high exposure to storms and its low elevation.

Surprisingly, the average cost of a flood insurance policy through the NFIP is 21% lower in Florida than the national average. Here are the five states that have the lowest average premiums, along with their annual rates:

  1. Florida – $545 
  2. Maryland – $573 
  3. Texas – $581 
  4. Utah – $654 
  5. Louisiana – $664 

 

In contrast, Connecticut had the highest annual premium—twice the national average and more than two-and-a-half times greater than Florida’s average rate. Here are the five states, four of which are in New England, that pay the highest rates in the country:

  1. Connecticut – $1,395 
  2. Vermont – $1,391 
  3. Rhode Island – $1,389 
  4. Massachusetts – $1,251 
  5. Pennsylvania – $1,176 

 

The zone in which you live will determine your premium 

Flood insurance rates will vary depending on your risk zone, your property’s elevation, and your house’s structure. For example, flood insurance rates in Florida can range from about $150 per year to more than $2,000! The FEMA Flood Map Servicing Center will allow you to find your zone.

If you type in your address and the map indicates you are in Zone X, you can relax because your house is located in an area of minimal flood hazard, and you probably won’t need to concern yourself with flood insurance.

On the other hand, if you’re living in a Zone V location–the most hazardous of the flood hazard areas and typically beachfront properties–flood insurance will be mandatory and costly.

The areas of moderate or minimal flood hazards–designated as B, C, X, AR, and A99 zones on the rate map—can get low-cost flood protection with NFIP’s Preferred Risk Policy. These FEMA preferred flood rates are modest in comparison to those in high-risk zones.

 

10 Questions to ask your agent about flood insurance

Here are some helpful questions you can pose to your agent as you shop for flood insurance:

  1. Does my community participate in the National Flood Insurance Program

(NFIP)?

  1. In which flood zone do I live?
  2. Do I qualify for a lower-cost Preferred Risk Policy (PRP)?
  3. What will and won’t be covered?
  4. Is flood insurance mandatory for my property?
  5. How much coverage should I get for my building and my contents?
  6. How can I reduce the cost of my flood insurance?
  7. Are there additional expenses or agency fees?
  8. Who should I call if I have a flood claim?
  9. How do I renew my policy?

 

Get started today with a free quote with White Cloud Insurance.