How Much Does Flood Insurance Cost?

Highlights

• Flood insurance costs between $438 and $1,308, with a national average of $834.
• The exact cost for a customer depends on their flood risk, their home’s location, and the amount of coverage they choose.
• Homeowners insurance is beneficial for those who live in a high-risk flood zone, but it can also be a smart purchase for homeowners with a lower risk of flooding.

Many homeowners who haven’t read their homeowners insurance policies assume that they are fully covered against all natural disasters—but in the case of flood damage, that simply isn’t true. The vast majority of homeowners insurance policies specifically exclude coverage of flood damage for one simple reason: It’s too expensive to pay for. Flood coverage isn’t cost-effective as an inclusion in general homeowners insurance policies. As a result, homeowners in areas that are likely to flood will want to strongly consider purchasing separate insurance for flooding, and in some cases, depending on the positioning of the land in the flood zone map, they may be required to by their mortgage lenders. So how much is flood insurance? According to NerdWallet, flood insurance costs between $438 and $1,308 per year, or $834 on average. This added cost can be a surprise to homeowners, but it’s better to be surprised by the additional expense of flood insurance than to suffer a loss resulting from a flood and find out that it won’t be covered. Homeowners may wonder, “Do I need flood insurance?” To answer that, homeowners will need to take a look at how the risks are assessed and decide if a flood insurance policy is worth the cost to them.

Factors in Calculating Flood Insurance Cost

There are many things homeowners don’t know about flood insurance. To start, not all houses need flood insurance. Plains or hillsides that aren’t close to water may seem like low-risk locations, and in general, they are. To check, homeowners will want to take a look at flooding maps provided by the Federal Emergency Management Agency (FEMA), which manages natural disasters and assesses the risk that different regions will experience them. FEMA maps allow users to check their flood zone by address or ZIP code. It’s important for homeowners to make sure to find the most current FEMA map available; these maps are redrawn frequently as weather and development reshape the land.

Homeowners located in high-risk flood zones may be required by their lenders to take out flood insurance policies, but for others, these maps can help assess the overall risk and help them decide whether or not they need flood insurance. After determining that this is an important component in protecting a home and its contents, the next step is for homeowners to consider how the rates are calculated. It may be useful for them to utilize a flood insurance cost estimator to get an idea of the costs.

Overall Flood Risk and Elevation

FEMA flood zone maps designate areas based on their overall likelihood to flood. Homes categorized by FEMA as being in 100-year floodplains face significantly higher annual costs than homes that are in moderate to low-risk areas. High-risk locations include low-lying areas and areas with nearby water sources, such as coastal areas and floodplains near rivers. In previous years, FEMA provided homeowners near floodplains with elevation certificates, which could be used to determine their overall risk and set their flood insurance rates. Those are no longer used to determine rates, but they can be acquired and used to offset insurance costs if homeowners have taken steps to elevate their homes above anticipated floodwaters.

In October 2021, the FEMA Risk Rating 2.0 was introduced, which is designed to more accurately assess flood risk based on data specific to a home’s location. This system is meant to make rates more equitable by basing them on factors like the home’s elevation, flood frequency, and the cost to rebuild the home in the event of flood damage.

State of Residence and House Location

While the average cost of flood insurance is $834, costs can vary by location. Several of the most expensive states for flood insurance are in the Northeast, where states are lower-lying and have significant coastal exposure. For instance, the average cost of flood insurance in New Jersey is relatively high at $1,001 per year. Connecticut, Vermont, and Massachusetts also have some of the highest rates in the country for flood insurance. Coastal states often have higher flood insurance rates as well—the average cost of flood insurance in Florida is $937 per year, for instance—but that won’t always be the case. On average, Maryland homeowners may only pay $438 per year for flood coverage.

Plains states and those without significant coastal or river expanses often have lower flood insurance prices. Case in point: Utah’s flood insurance costs are relatively low, with policyholders paying $690 per year, on average. Oddly, some states that do have significant flood risks, such as Texas and Louisiana, offer relatively low rates compared with other areas of the country. For instance, homeowners in the Lone Star State can expect their flood insurance costs in Texas to come out to $661 per year, on average.

The following list shows the average annual cost of flood insurance in certain states:

• California: $801
• Colorado: $791
• Florida: $937
• Louisiana: $747
• Maryland: $438
• New Jersey: $1,001
• North Carolina: $690
• Ohio: $932
• Texas: $661
• Utah: $659

Even within each state, however, the specific location of a home can affect the rate a homeowner will pay. If the house is on a hill, for example, the rate may be lower than for someone whose house is right beside the riverbank even though they’re both in the same risk area. With that in mind, homeowners may want to look up flood insurance rates by ZIP code to get the most accurate flood insurance estimate for homes in their area.

Policy Type

There are two basic types of policies, with the first being administered by the National Flood Insurance Program (NFIP). Coverage can be purchased directly through the NFIP, with limits of $250,000 on building coverage and $100,000 on contents coverage. In addition, private insurance companies offer flood insurance, but many of those policies are actually underwritten by the NFIP and follow the same guidelines. Several private insurance companies do offer policies that are separate from the NFIP and feature higher coverage limits.

Coverage Type

What does flood insurance cover? Each policy is divided into two categories: building coverage and contents coverage. Building coverage includes damage to the structure of the building itself and things that are attached to it: foundations, walls, built-ins, and home systems. Replacement cost coverage will typically be applied to structures by both the NFIP and private insurers, meaning the insurance provider will pay the cost to rebuild the home at current market prices, less the deductible.

Contents coverage pays for personal items and appliances not attached to the structure. Contents coverage from the NFIP pays out based on the actual cash value of destroyed items, meaning that homeowners will receive the depreciated value of the item, less the deductible, and won’t receive a brand-new version of the item. Private insurers may offer homeowners a choice between replacement cost coverage and actual cash value when it comes to contents. Each category is subject to its own deductible before the insurance will begin to pay.

Home Age, Design, and Construction 

Newer homes are built with flood prevention and abatement in mind. Construction materials that resist water damage and construction styles, such as integrated floor drains on lower levels to speed up drainage in the event of a flood, can reduce the amount of damage caused by flooding and reduce the overall cost of repair. As a result newer homes, especially those that include these kinds of features, cost less to insure. Older homes won’t include these design features and can cost more to repair, especially if the vintage trims and floorboards can’t be replaced with products off the shelf and will require custom construction. Older materials may also be drier and more absorbent than newer materials and thus more prone to damage and mold. Therefore, older homes are in general more expensive to insure. Elevating the home, installing floor openings and drains, and even filling in the basement (especially in a high-risk area) can reduce the cost of a flood insurance policy.

Coverage Amount and Deductible

As with any insurance, the total cost of the policy can be tweaked based on how much flood insurance coverage the homeowner wants and how high they’d like their deductible to be. A policy with a lower level of coverage and a high deductible will cost the least, whereas a policy that has a lower deductible and higher coverage limit will raise the total cost.

For homes where the risk of flooding is lower, a higher deductible can make sense: In that case, the insurance is being purchased to be on the very safe side, so accepting a higher deductible on the off chance a claim will actually need to be filed to keep the premium lower makes sense. In a high-risk area, however, low coverage and a high deductible may feel better on the wallet initially but will hurt when the time comes for a major claim to be filed. Balancing these numbers against the risk of actually needing to use the insurance can be tricky, so it’s a good idea for homeowners to work with an honest agent to help find the sweet spot.

Location of Home Contents

Flood insurance through the NFIP will not cover personal items stored in a basement, although some private flood insurance companies might. The logic there is that if the homeowner knows they’re in an area where the risk is great enough that they’ve purchased flood insurance, they need to make an effort to protect their own property by storing it carefully above the flood levels if at all possible, and by storing items of significant value in a location where they are less likely to be affected. Homeowners are advised to store valuable or sentimental items in higher locations or protect them in watertight containers. Sentimental items aside, even the location of the home’s utilities is a consideration; if they are elevated, flood insurance likely won’t be as costly.

Actual Cash Value vs. Replacement Cost Coverage

As noted, NFIP flood insurance includes actual cash value coverage rather than replacement cost coverage. This means that when a policyholder makes a claim on their flood insurance, the insurance company accounts for depreciation when calculating the value of a policyholder’s belongings. As a result, homeowners may receive less money from their claim than it will cost to replace any covered items that are damaged or destroyed during a flood. Replacement cost coverage, on the other hand, insures items for the amount it would cost to replace them at today’s prices.

Private flood insurance providers may give policyholders the option to choose either actual cash value or replacement cost coverage. While replacement cost coverage is the preferable option for many homeowners, it also comes at an additional cost in many cases. Is flood insurance expensive with this extra coverage? While selecting this type of coverage could increase the total cost of flood insurance, the peace of mind it affords may be worth the added expense.

Types of Flood Insurance 

Homeowners have the option to buy flood insurance through the National Flood Insurance Program or through a private insurer. Each type of insurance has its differences, as well as several pros and cons.

National Flood Insurance Program (NFIP)

FEMA flood insurance through the NFIP has a number of benefits to homeowners. First, it can offer coverage to any homeowner and, in some communities, to renters, regardless of the risk level of the home. NFIP plans are backed by the federal government, so there’s no worry to the homeowner about paying for coverage that then magically disappears when it comes time to make a claim. NFIP programs do, however, have maximum coverage amounts ($250,000 for building coverage and $100,000 for contents), which some homeowners may find insufficient. In addition, NFIP plans will not cover damage that occurs as a result of ground shifting or that is on the property but outside the house. Unlike private insurers, however, NFIP plans can’t drop coverage if the risk assessment changes, so there’s a guarantee of coverage present that may not be the case with other insurers.

Federal flood insurance policies are often more limited in scope than private flood insurance as the NFIP does not offer additional coverage options such as loss of use or debris removal protection. Loss of use coverage can help pay for additional living expenses if the policyholder is unable to continue living in their home while repairs are being made. Policies with debris removal coverage, meanwhile, can provide funds for homeowners to pay to have any debris removed that may be left behind on the property after a flood, such as uprooted trees, garbage, etc.

Private Flood Insurance

Private insurers can offer higher coverage limits than the NFIP, and often add coverage of living expenses if homeowners are forced to live somewhere other than their home during repairs or rebuilding, both of which are clear benefits if the home is of high value and is in a location where extensive damage is likely. However, if the risk level changes when FEMA redraws its assessments, private insurers can cancel coverage with very little warning and no negotiation, leaving homeowners without coverage and facing a month-long waiting period before a newly purchased NFIP policy will take effect, so the better coverage provided by private insurers comes with some risk.

Another benefit of private flood insurance is that companies often offer additional coverage options that are not available with NFIP policies. Most notably, homeowners may be able to purchase loss of use coverage in case they need to find other living arrangements after a flood, or debris removal coverage to help pay the costs to clean up their property.

However, flood insurance is limited to floods that occur naturally as a result of storms, hurricanes, or large-scale pooling. It will not cover damage to:

• Swimming pools
• Decks
• Patios
• Landscaping
• Paperwork or cash
• Personal items stored in the basement
• Vehicles

Private flood insurance does not have the same limitations as the NFIP coverage, and may offer coverage for:

• Loss of use
• Loss avoidance
• Replacement costs for belongings
• Belongings stored in a basement

These limitations are key to remember: NFIP flood insurance will cover personal items, but not if they’re stored in the basement, so homeowners will want to plan accordingly. Similarly, they’ll want to make sure that large sums of cash and important or valuable papers are stored in watertight containers for preservation in case of a flood.

Do I need flood insurance?

Adding the cost of flood insurance to the cost of homeowners insurance can be hard for homeowners to wrap their heads around, but in some cases it’s unavoidable. How can homeowners tell if they need flood insurance? First, they’ll need to check the position of their home on FEMA’s floodplain maps by searching for flood zones by ZIP code. They will need to consider the history of flooding in the area, their proximity to bodies of water that can or often do flood, and what they’ll lose if their home is flooded. These factors will need to be balanced against the cost of the flood insurance, ultimately informing whether paying for flood insurance makes sense. They may also consider consulting their mortgage lender—lenders are laser-focused on protecting their investments, so if the lender believes that the home needs flood insurance, it does. Water damage can be catastrophically expensive, and 1 foot of water can cause $29,000 worth of damage to a 1,000-square-foot home. Those who live in an area with a reasonable risk of flooding will need to consider their choice carefully.

In most locations, renters can purchase flood insurance policies for their home’s contents. Damage caused to the property and structure of the home would be the responsibility of the landlord, so renters will not need to pay for that coverage, but especially in high-risk areas it’s a wise decision to insure belongings. Renters can check with the landlord to see if there’s a policy in place, then decide if they need to buy a policy to protect their personal belongings.

Flood Risk 

Watching the news can easily make it appear that flooding is a real threat: Changing climate patterns have shifted the balance of weather and created problems with water where none existed before. Beginning in late 2021, FEMA implemented a new risk-evaluation system to more accurately set premiums for different areas. These assessments take more factors into account when setting the appropriate rate; instead of relying just on elevation and proximity to floodplains, Risk Rating 2.0 considers how often an area has flooded historically and how much it would cost to rebuild in order to set rates more equitably. These assessments can help homeowners evaluate how likely it is that their home will flood and what it might cost to rebuild, which will help them determine if they want the peace of mind provided by flood coverage.

Mortgage Lender Requirements

If a mortgage lender requires a homeowner to carry flood insurance, they’ll need to comply. Even for those who are on the edge of an area where it would be required or who have paid off their mortgage, it’s still a wise investment to protect the home and its contents in a high-risk area. And as weather becomes more unpredictable, homeowners in areas that aren’t typically at a high flood risk may choose to take out flood insurance to protect their assets.

Proximity to Water

Looking at FEMA flood maps, homeowners may notice that areas closer to bodies of water, such as lakes, rivers, and oceans, are more likely to be located in high-risk flood zones. With less ground for flood waters to travel, it stands to reason that houses sitting closer to water will be at a higher risk of flooding and, as such, be more likely to require flood insurance. Homes built on the edges of lakes or rivers may be more expensive to insure against flood damage, but homeowners may also find themselves needing that coverage more frequently.

Benefits of Getting Flood Insurance

Depending on their location, homeowners may not have a choice about flood insurance—those who are required to purchase it by their mortgage lender, for instance. But for many who are not required to purchase it, protection from one of the best flood insurance companies can still be truly beneficial. Flood damage can destroy a home, both in the initial stages of soaking the possessions and structure in water that contains debris and bacteria, and then slowly over time via mold and structural instability that can develop as the water dries. Finding and assessing the damage, then repairing or replacing what needs to be abated, is not always straightforward and is very, very expensive. In addition, the negative health effects of slow-growing mold that has gone undiscovered as a result of delayed inspections can be dangerous. Flood insurance can help mitigate these issues.

Financial Protection

Flood insurance provides significant financial support. Homeowners whose homes are flooded during a covered event can expect to have the financial support to bring the home back to its pre-flood state, regardless of what their credit limit or savings are. The insurance will cover the cleanup and repair costs, and depending on the policy, it may cover expenses while the homeowner stays elsewhere during the repair.

One of the biggest benefits of flood insurance is that because coverage is guaranteed, inspections and repairs can be completed immediately. Without insurance, such services will require a significant out-of-pocket expense, which may cause homeowners to delay having the work done. The problem is that water doesn’t care if homeowners have enough money to cover the cost of the mold inspection or a compromised foundation’s repair: The problems will get worse, not better, if repairs are delayed. Those who have flood insurance can have the work done promptly rather than letting problems develop and spread.

Peace of Mind 

Especially in a flood-prone area, the threat of losing a home, possessions, and financial security may weigh heavily on homeowners’ minds. Every homeowner has nightmare scenarios in the back of their mind, asking themselves what they would grab on the way out if they had only moments to leave in a fire or threat of a tornado. Floods can be just as sudden and just as destructive, if not more so. Having financial coverage in a flood can make it easier for homeowners to make preparations for and decisions about what actions to take in an emergency situation.

How to Save Money on Flood Insurance Cost

Flood insurance premiums are at least partially based on where you live and the size of your home because those two factors affect the risk the insurance company is taking by insuring your home. There are, however, some steps you can take to pay less to get the best cost for flood insurance and save some money.

• Elevate your utilities. If your furnace and water heater rest on the basement floor, elevating them on a platform or even a (sturdy) stack of cinder blocks can prevent them from being damaged immediately. This action can lower your premium cost.
• Elevate your property. While the initial cost of elevating a home may be high, it can save you hundreds every year on flood insurance. Once the home has been elevated, you’ll need to get an elevation certificate every year to receive a discount on insurance.
• Install flood openings or drains. This will require an initial outlay of money but will continue to save on premiums for as long as you have insurance—and it can also greatly reduce the damage caused in a flood.
• Increase your deductible. If you expect to remain in your home for some time, build up a small savings that is equal to a higher deductible and keep the account in good standing, then raise your deductible. This will lower the cost of the premium each year without creating a risk of being caught financially off guard if you experience a flood and need to file a claim.
• Shop around. The NFIP is a safe, well-supported option, but depending on your circumstances, you may find a better value at a private insurance company, so be sure to get more than one flood insurance quote before you settle on a plan.
• Relocate. If moving is possible from a financial and logistical standpoint, relocating to a less risky area in terms of flooding can save you from expensive premiums and reduce the possibility of having to file a claim in the future.

Questions to Ask About Flood Insurance 

Flood insurance, while generally similar to other types of insurance, has different parameters and regulations than other policies a homeowner may be familiar with. As a result, it’s important for homeowners to ask their agent questions about anything that seems unclear or unfamiliar. The problem is when a homeowner doesn’t know what questions to ask, so the following are some questions that those who haven’t purchased flood insurance before may not know to ask.

• Do I actually need flood insurance?
• Does my homeowners insurance already include a flood clause? Homeowners insurance covers water damage in certain situations, but typically not for flooding water. Some companies may offer flood coverage as an endorsement, though.
• Do I need flood insurance as a renter?
• What flood zone am I in?
• How much does flood insurance cost in my flood zone?
• Does this policy include sewer backup coverage?
• Does this policy cover my entire home and property?
• What is the lowest point of elevation on my property?
• Does this policy pay out the actual cash value for damage or the full replacement value?
• How long is the waiting period before this policy is active?
• What is the most frequent reason for denying a claim?
• What is the process for filing a claim? Is there a time limit?
• Does my policy include loss of use and debris removal coverage?

FAQs

Learning about flood insurance can be a daunting process, especially for those buying a home in a floodplain for the first time. The following are some of the most common questions from homeowners looking into flood insurance and their answers to provide a baseline of knowledge for comparing products.

Q. How are flood insurance rates calculated?

Insurers will look at FEMA’s maps to determine the age, size, and design of a home, then combine that information with the level of coverage desired by the homeowner and the deductible they’d prefer to pay. Together, this information will allow the company to arrive at a premium cost to insure the home. Homeowners may be able to reduce that price by lowering their coverage amount or raising their deductible.

Q. What does flood insurance cover?

This depends on the insurer and the contract. The NFIP has two types of policies:

• Contents coverage, which will pay for personal items, portable appliances, art, freezers (not refrigerators) and their contents, and washers and dryers.
• Building coverage, which will cover whole-house systems like plumbing and electrical; built-in appliances and bookcases; building materials including carpets, paneling, wallboard, and cabinets; and detached garages.

Comprehensive plans will cover both contents coverage and building coverage, and private insurers will have specific lists that will be similar to NFIP coverage. Homeowners will want to check the policy terms carefully before buying a policy to make sure the components in the home that will cost the most to replace are covered.

Q. Is flood insurance paid monthly or annually?

Flood insurance premiums are usually paid annually, because that’s the simplest way to make sure coverage is in place when it is needed. Since there’s a waiting period between when signing the policy and when it takes effect, monthly payments would make it difficult to keep track of when the policy is in effect and when it is not.

However, if the homeowner has an escrow account with their mortgage lender and is paying their homeowners insurance and taxes through that account, they can often include their flood insurance and have it paid for them through that escrow account, which can help spread the payments out across the year. Therefore, if the initial cost of the insurance is prohibitive, homeowners can inquire with their lender to see if paying through escrow is an option.

Q. How long does flood insurance last?

NFIP policies last for 1 year, and then homeowners can check their coverage options and renew. Private insurers have different policy periods, so it’s wise for homeowners to check the companies that are being considered and see how they compare.

Q. Does flood insurance cover sewage problems?

Sewage backups are considered a maintenance issue, not a flooding issue, so they are not covered by flood insurance as a rule, though certain levels of NFIP coverage will include sewer coverage. If this is a concern, it may be possible for a homeowner to add an extra endorsement to their homeowners insurance policy to make sure that sewer backups are covered.

Q. How quickly can I get flood insurance?

Flood insurance can be purchased at any time. However, the policy may not take immediate effect—so homeowners won’t want to wait to purchase the policy until a 100-year storm is on the way. Policies purchased through the NFIP have a standard 30-day waiting period between the purchase of the policy and the date that the policy takes effect, while private insurers usually have a waiting period closer to 14 days. In certain scenarios—buying a new house or switching providers—policyholders may be able to have their waiting period waived, as is the case with some of the best flood insurance companies in Florida.

Sources: NerdWallet