USA - How Much Does Flood Insurance Cost? Everything You Need to Know
Floods are the most common natural disaster in the United States. And they can be devastating: Just an inch or two of water damage can cause more than $25,000 in repairs and lost property. Flood insurance is unique because most policies are sold and backed by the federal government. (Homeowners insurance generally doesn’t cover flood damage.)
But that valuable protection comes at a cost, roughly $752 on average nationwide in 2022. Many policyholders have seen their flood insurance premiums rise following a FEMA risk rating system rolled out in December 2021.
Here’s how much flood insurance costs now along with ways to save money in the future.
What Is Flood Insurance?
Flood insurance is a type of property insurance that covers a home or business against water damage caused by flooding. Standard home insurance doesn’t cover that kind of damage.
Flood insurance is available in over 24,000 communities across the U.S. It’s required for homes with government-backed mortgages that sit in areas deemed “high-risk” by the Federal Emergency Management Agency (FEMA).
Many banks also require flood insurance in high-risk zones.
Coverage is primarily issued by the National Flood Insurance Program (NFIP), which works with more than 50 insurers to sell its policies. Private companies also sell flood insurance, though these policies make up just a small fraction of the overall flood insurance industry.
How Much Does Flood Insurance Cost?
The average cost of flood insurance from the National Flood Insurance Program is roughly $752 a year, or about $63 a month.
Your specific flood insurance cost will depend on many factors, including your home’s location, size and elevation.
For example, if you live in a high-risk flood hazard area — like zones A, AE or AO — your flood insurance rates will be much higher than a homeowner living in a lower-risk area.
Methodology: How We Calculated the Average Flood Insurance Premiums
The Penny Hoarder used data from the National Flood Insurance Program’s Policy Information by State report to calculate the national and state average costs of flood insurance. The average cost is the total premium divided by the total policies that were active as of Aug. 31, 2022 for single-family homes, multi-family homes and businesses. The national average does not include U.S. territories. Flood insurance premiums include the federal policy fee that policyholders pay to renew or purchase a policy.
4 Factors That Impact Your Flood Insurance Rate
Certain factors, like your home’s location and age, make your property costlier to insure. Policy details also help determine flood insurance costs.
1. Flood Risk
This may seem obvious, but your flood insurance rates are largely determined by how susceptible your home is to flooding.
Homeowners located in what’s known as a special flood risk hazard area pay the highest flood insurance rates, while people in moderate- and low-risk zones can usually qualify for much lower rates.