How Much Does Flood Insurance Cost?

Written by Will Caldwell

Just what you need as a homeowner … another bill. But it’s far better than having to pay out of pocket for flood damage. Restoring a home after a flood can cost anywhere from the thousands to the tens of thousands.

Many homeowners think their homeowner’s policy covers them in the event of flooding, but it only protects them if the water enters from above. For example, stormwater from a compromised roof. 

If water enters from the ground — storm runoff, overflooded river banks, etc. —  homeowner policies do not cover damages. 

So how big a bite are we talking about? How much can you expect flood insurance to cost?

How Do You Determine if You Need Flood Insurance?

First, let’s address whether or not you need to eat this expense at all. Not every home needs flood insurance, but it’s always worth at least considering. Here’s how to determine if you need flood insurance … 

Your Lender Requires It

If you are financing the home, your mortgage lender may make the decision for you. They may check FEMA flood maps and determine that your home is at significant enough risk of flooding to require it. One way they do this is by ordering a Flood Certificate which includes basic flood zone determinations. Here is an example of our popular SnapFlood Report: https://www.snapcorp.com/examples/snap-flood-report-example.pdf

Why does your lender do this? Because the home itself is collateral for the mortgage loan. If the house is destroyed by flooding, the collateral loses value. Lenders do this to protect the investment they made in writing the mortgage. Lenders often require escrow accounts for insurance and property taxes for the same reason. 

The Property Sits in a FEMA Flood Risk Zone

If buying without a loan, or if you just want to check your lender’s work, official flood-risk maps are a matter of public record. They are maintained by the Federal Emergency Management Agency (FEMA). 

You can go to https://www.fema.gov/flood-maps and search your address. The maps can take some time to learn to read, but generally, if your home is categorized by the letters B, C, or X, your home is considered to have a low-to-moderate risk of flooding. One in three flood claims come from zones with this designation.

The other two-in-three come from high-risk zones, designated by the letters A or V. Flood insurance is definitely recommended in these zones.

An Independent Analysis Recommends It

During the August 2021 rainfall in Central Tennessee, hundreds of homes flooded. It was discovered that FEMA had not updated its maps on the schedule required by the law. Some homeowners’ homes flooded despite not being on FEMA flood zones, and without flood insurance they were left exposed to catastrophic losses.

In other words, the FEMA maps are not infallible. If you want extra assurance, consider ordering an independent flood assessment and elevation report to determine your risk of flooding. It’s an extra expense, but it could be worth the peace of mind.

You Want An Extra Layer of Protection 

The bottom line — even Federal agencies aren’t perfect, and consumers suffer when they don’t get proactive about their risk factors. Flooding is the most common source of property damage by natural disasters, far more common than tornado or earthquake damage.

Due to climate change, flood risks are also consistently increasing and projected to get worse. According to the EPA, “The average 100-year floodplain is projected to increase 45 percent by the year 2100, while the annual damages from flooding are predicted to increase by $750 million.” Even if your home is not situated in a Federally-designated flood zone, it may be worth the peace of mind to independently investigate your flooding risk.

If you would like to do more research on this, check out our full blog: “How do I find out if my property is in a Flood Zone?”

What Contributes to the Cost of Flood Insurance?

Once you have determined that you need flood insurance, the next obvious question is “How much will it cost?”

As with many forms of insurance, it depends. Many variables contribute to the cost of flood insurance. Here are some of the factors that contribute to the final quote …

  • Public vs. Private. There is actually a public flood insurance program run by the Federal government, overseen by the National Flood Insurance Program (NFIP). Recently, however, private flood insurance policies have become available. These policies tend to be special-purpose, and some lenders may require NFIP insurance. However, private flood insurance could be cheaper … or more expensive, depending on other factors. 
  • Type of Coverage.  Flood insurance is actually two policies, not one. One policy covers damage to the structure, while a separate policy covers flood damage to personal belongings within the structure. If you have a lot of expensive personal property stored inside your home, you may face higher premiums to cover it. Sometimes you can find a private insurance company that will combine these into one final policy. 
  • Coverage Limit. Coverage limit is the maximum payout your insurer will absorb. The higher the coverage limit, the higher the premium. By law, NFIP policies have a coverage maximum of $250,000 for the structure, $100,000 for personal belongings. If you have a bigger house or more belongings and want a higher coverage limit, you may be able to obtain it from a supplemental private flood insurance provider.
  • Deductible. The deductible is the portion of the flood damage that the policyholder will be responsible for. For example, if a homeowner faces a $10,000 flood repair bill and has a $1,000 deductible, the homeowner must contribute $1,000 and the insurer will pay the other $9,000. The lower the deductible, the higher the premium cost. 
  • Flood Risk. Depending on the assessed flood risk, either from FEMA flood maps or independent analysis, the policy might be more or less expensive. The higher the assessed flood risk, the higher the premium.
  • Elevation. Homes often come with official elevation reports, assessing how high above sea level the ingress points of the home are. Depending on the construction, it could be at a higher elevation than other properties in the zone. If a property is in a high-risk flood zone but has been constructed to have a high elevation, it may be eligible for less-expensive flood insurance. 
  • Home Age and Construction. Older homes, built with outdated construction techniques, may be at greater risk of damage during a flood, and as such may be more expensive to insure against flooding. 

So How Much Can I Expect to Pay for Flood Insurance?

As you can see, flood insurance costs can vary significantly based on the property and the risk tolerance of the policyholder. That being said, the average cost of flood insurance is $738 per year. For homeowners in high-risk flood zones, standard flood policies average closer to $1,167 per year.

Where do I Get Flood Insurance?

Flood insurance, including public NFIP insurance, can be purchased from many independent insurance brokers and providers. You can find NFIP insurance providers by searching the NFIP database at FloodSmart.gov/flood-insurance-provider, or by calling NFIP at 877-336-2627.

Insurance agents can also broker private flood insurance policies. They are easy to find on search engines, social media, and agency databases. Friends, family, and colleagues may also be able to recommend an agent to you.

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No one likes extra expenses, but if you live in a flood zone — or even if you don’t — flood insurance can be well worth the expense. If you get unlucky and suffer flooding damage in your home, it could be a massive boon to your pocketbook.