How Much Does Flood Insurance Cost?

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The average cost of flood insurance from the National Flood Insurance Program (NFIP) is $995 a year, according to a Forbes Advisor analysis of flood insurance rates. Many homeowners assume their homeowners insurance covers floods. But that assumption could be a costly mistake.

Standard home insurance does not cover flood damage.

Floods are the most common natural disaster in the United States and have impacted 99% of counties between 1996 to 2019, according to FEMA. Just 1 inch of water can cause $25,000 worth of damage to a home. But floods are often more devastating than that. The average flood claim payout from the National Flood Insurance Program (NFIP) in 2019 was $52,000.

Given that so many homes in the U.S. are at risk for flooding and the ensuing financial disaster, you would think that more homeowners would have flood insurance. Unfortunately, it’s the opposite. It is estimated that between 85% and 95% of homeowners do not have flood insurance, according to the National Association of Insurance Commissioners.

Flood Insurance Costs by State

Flood insurance costs vary based on multiple factors, including where you live, the cost to replace your home and how much coverage you buy.

Here are the average annual flood insurance costs by state for a policy from the National Flood Insurance Program, according to a Forbes Advisor analysis of flood insurance rates.

Average flood insurance costs by state

Most Expensive States for Flood Insurance

The most expensive state for flood insurance is Vermont with an average cost of $1,610 a year. Here are the five most expensive states for flood insurance:

  • Vermont
  • Connecticut
  • Rhode Island
  • Pennsylvania
  • West Virginia

That doesn’t mean you will always pay more if you live in those states. Your flood risk is a major cost factor. Homes in high-risk areas cost more for flood insurance than homes with a lower flood risk.

Cheapest States for Flood Insurance

The cheapest state for flood insurance is Florida with an average cost of $624 per year. Here are the five cheapest states for flood insurance:

  • Florida
  • Maryland
  • South Carolina
  • Texas
  • Hawaii

Factors that Determine Flood Insurance Cost

Here are the common factors that determine flood insurance costs:

Flood risk

Flood insurance costs are largely based on your property’s flood risk. Homes that have a higher flood risk will pay more for homes with a low flood risk.

For example, FEMA’s Risk Rating 2.0 takes into account the elevation of your home, the foundation type, first floor height and the distance to water.

Building characteristics

Insurers will also factor in the physical characteristics of your building, such as:

  • The materials your home is made of. For example, masonry walls perform better in floods compared to wood frame walls, which can result in lower flood insurance rates.
  • Building occupancy. The type and use of your building will be factored into your rates.
  • Number of floors. Buildings with more floors spread their flood risk compared to a building with one floor.
  • Machinery and equipment. Elevating equipment such as hot water heaters and central air conditioning units above the first floor lowers the risk of damage to your machinery and equipment.

Type of policy

Your flood insurance policy coverage type influences rates. For example, you can buy a building-only policy, contents-only policy or both from the NFIP. You’ll pay more for flood insurance if you buy both building and contents coverage compared to a building-only policy.

Coverage types and amounts

How much coverage you buy influences costs. For instance, a private flood insurance policy that offers building coverage of $1 million will cost you more than a NFIP policy with $250,000 in building coverage.

Deductible amount

Similar to other types of insurance policies, a flood insurance policy will have lower costs if you have a higher deductible. An insurance deductible is subtracted from an insurance company claims payout, so if your house has $50,000 worth of flood damage and you have a $2,000 deductible, the insurer will pay you $48,000 for the damage.

Insurance company

Insurance companies don’t charge the same for coverage. You may find one flood insurer charges much higher rates for the same coverage than another insurance company. That’s why it’s vital to shop around and get flood insurance quotes from multiple insurers when looking for a private flood insurance policy.

What Is Risk Rating 2.0?

The pricing methodology for FEMA flood insurance has been the same since the NFIP was introduced in 1968. This methodology relied on “Flood Insurance Rate Maps” (FIRMs) to determine flood insurance costs. The problem with this model was that too many properties were inaccurately rated and the premiums were insufficient to cover flood claims, which led to massive debt for the NFIP.

To address the inaccurate rates and debt, FEMA introduced Risk Rating 2.0. This new methodology no longer uses flood maps. Instead, rates are based on an individual property’s risk, such as the foundation type, elevation of the home and the distance to water. Risk Rating 2.0 is intended to produce the most accurate flood insurance costs, according to FEMA.

How Does Risk Rating 2.0 Affect NFIP Flood Insurance Costs?

Your flood insurance costs may have increased or decreased under Risk Rating 2.0, a new system for setting rates based on each property. These rates went into effect for new policies and policyholders who wanted to take advantage of new rates on Oct. 1, 2021. Risk Rating 2.0’s rates went into effect for all remaining policies renewing on or after April 1, 2022.

Many homeowners saw a modest increase in rates. Here’s a look at how the change affects flood insurance rates in each state.

States with small flood insurance cost increases after Risk Rating 2.0

Read more: Here’s who gets hit hardest by new FEMA flood insurance rates

How NFIP Flood Insurance Rates are Determined

Risk Rating 2.0 calculates your flood insurance rates based on your property’s flood risk, including:

  • Foundation type
  • Structure
  • Elevation
  • Replacement cost
  • Frequency of a variety of flood types
  • Distance to water

How to Save Money on Flood Insurance

Here are some ways you can lower your flood insurance cost:

Mitigation discounts

FEMA offers discounts to homeowners who take actions such as installing flood openings and elevating your machinery and equipment (such as a central air conditioner and hot water heater) above the first floor.

Get an elevation certificate

If your home has an elevation certificate that shows your first floor is higher than the first floor height determined by FEMA, you could get a lower premium.

Choose a higher deductible

FEMA flood insurance policies have separate deductibles for buildings and contents coverage, ranging between $1,000 and $10,000. If you select higher deductible amounts, you’ll pay less in premiums. You can save up to 40% if you select a $10,000 deductible, but keep in mind, you’ll have to pay that amount if you file a flood insurance claim.

Community discount from the NFIP

Community Rating System (CRS) discounts are based on your community’s efforts to reduce flood risk. Ask your insurance agent if your community participates in the CRS.

Do I Need Flood Insurance?

Some homeowners may be required to have flood insurance, including:

  • If you have a federally backed mortgage and live in a Special Flood Hazard Area within a NFIP community
  • If you live in a high-risk flood area and have received federal disaster assistance and want to be considered for any future federal disaster aid
  • Your lender requires flood insurance

Even if you are not required to have flood insurance, it’s worth considering. That’s because homeowners insurance won’t cover flood-related damage.

How to Get FEMA Flood Insurance

The NFIP is managed by FEMA and sells federally backed flood insurance through more than 50 insurance companies through an initiative called NFIP Direct. NFIP policies are available in more than 22,000 communities that participate in the program. The program is the primary provider of residential flood insurance in the U.S. It covers more than 5 million homes and businesses.

To get an NFIP policy, contact your home insurance agent. You can also find a flood insurance provider on FEMA’s website.

There is typically a 30-day waiting period to buy flood insurance before it is effective, so it’s a good idea to buy a policy as soon as possible.

How to Get Private Flood Insurance

FEMA flood insurance is not the only option. You can also buy flood insurance from a private insurer. It’s a good option for homeowners who don’t live in an NFIP participating community or homeowners who find FEMA coverage options to be insufficient.

Private flood insurance may be available as:

  • Base policy, meaning an alternative to FEMA flood insurance.
  • Excess policy, which will provide supplemental coverage on top of your base FEMA policy. For example, the NFIP policy limits for building coverage is $250,000, but you might want $500,000 of coverage. An excess flood insurance policy could cover the additional $250,000.

Higher Costs Could Result in 1 Million Fewer Americans with FEMA Flood Insurance

Due to higher costs for some homeowners, one million fewer Americans will buy FEMA flood insurance by the end of the decade, according to a report obtained by the Associated Press under the Freedom of Information Act. The report was originally provided to the U.S. Treasury Secretary and some congressional leaders at the end of 2021.

FEMA has downplayed the report and stated that the numbers were taken out of context, noting that the agency has not directly studied how many homeowners will buy flood insurance.

“There’s numerous reasons that growth could occur as time goes on,” said David Maurstad, a senior executive of the NFIP. Maurstad added that an enrollment analysis should factor in FEMA’s marketing efforts, clear messaging of flood risk, price decreases and other factors.

Flood Insurance Costs Frequently Asked Questions

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