Standard homeowners' insurance, including umbrella coverage, typically does not include flood insurance. You have to take out a separate flood insurance policy on top of your homeowner's policy. The National Flood Insurance Program, operated by the federal government, works with independent agencies to provide flood insurance to homeowners.
As of 2015, homeowners pay about $700 annually in flood insurance, according to the official website of the National Flood Insurance Program, FloodSmart.gov. The consumer website CostHelper quotes $500 as a national average with rates for high risk areas as high as $2000.
What's Covered in Your Policy
Flood insurance policies may cover damage to building property, your personal belongings or both. Under building property, insurable elements include the building structure and foundation, electrical wiring, heating and cooling systems, refrigerators and other large appliances. On the contents side, curtains, clothing, portable appliances and artwork qualify to be insured.
What's not included in flood insurance:
- Preventable mold and mildew damage
- Living expenses
- Currency, stock certificates
- Property outside of the insured building, i.e. decks, patios and hot tubs
Low- to Moderate-Risk Policy Rates
According FloodSmart, low- to moderate-risk policyholders can expect to pay an annual premium, as of 2015, as low as $44 for a $8,000-contents-only policy, or as high as $452 for a building-and-contents flood insurance policy with maximum coverage of $250,000 for the building and $100,000 for contents, inclusive of a basement or enclosure.
Building and Contents
Rates for low- to moderate-risk building-and-contents policies start at $137 annually for coverage of $20,000 for the building and $8,000 for contents, not including a basement or enclosure. Rates increase incrementally as coverage amounts increase: a mid-range $125,000/$50,000 policy including a basement would cost $359.
Low- to moderate-risk contents-only policies range from $8,000 in coverage up to $100,000, as of 2015. Annual premiums depend on whether the contents are above-ground or not. For a $100,000 contents-only policy, an above-ground policy would cost $215, as opposed to $266 for contents not located above-ground.
High-Risk Policy Rates
Homes located in areas designated by the Federal Emergency Management Agency (FEMA) as high-risk for floods are subject to steeper flood insurance premiums. Flood zones categorized by FEMA as A or V are called Special Flood Hazard Areas and homes therein require mandatory flood insurance. V zones are subject to wave velocity and include beachfront property, whereas A zones involve rising-water risk due to proximity to a body of water.
If you reside in one of these high-risk flood zones, a licensed insurance agent can help determine your premium based on the elevation level of the lowest floor of your home, as well as other variables.
As of April 2015, high-risk areas get subsidized rates if:
- Current subsidized policyholders are newly mapped into higher-risk zones
- The home becomes grandfathered into a higher risk area due the alteration of a flood map
Factors in Premium Cost
If you purchase flood insurance through the National Flood Insurance Program, the government takes into account the value of your home and which flood zone your house occupies. FloodSmart notes that these factors go into a premium determination:
- Location, age and design of the home
- The home's flood zone
- The amount of coverage
- Type of coverage, i.e. contents only
Note that coverage for the national program tops out at $250,000 for the building and $100,000 for valuables. If your home's value and contents exceed these amounts, you may need to obtain excess flood insurance to make up the difference.
Reducing Flood Insurance Premiums
As insurance matching service InsuraMatch notes, you can lower your flood insurance premiums by reevaluating your current flood insurance policy with an insurance agent specializing in flood insurance. He can help pinpoint errors in your policy and find out where you are overpaying.
You can also take these steps to pay less for flood insurance:
- Move your primary utilities to above the base flood level, i.e. to an attic or onto an elevated platform, which can help reduce premiums significantly. In addition, elevate your living area, for a savings of 30 percent off your premium for every foot of elevation.
- If you are located on a flood plain, create openings in the foundation according to the specifications of the National Flood Insurance Program, as a means of reducing your rates.