In 2018, the average flood insurance premium cost $642, with an average coverage of $257,000. While knowing the averages is nice, it isn’t constructive. You’re still left asking, how much does flood insurance cost?
This guide will help you estimate your flood insurance costs. Several factors influence the cost, so you’ll need to consider your specific circumstances.
Are you ready to have a better understanding of flood insurance prices?
How Much Does Flood Insurance Cost?
Several factors affect the cost of your flood insurance. Where you live, your home’s age and condition, your risk of flood, the type of coverage, deductible, and coverage limits all affect the final cost.
The first factor that determines your flood insurance cost is the state you live in. Some states can be as cheap as $550 per year. Other states can be as expensive as $1,400 per year.
An older home could be at greater risk of flood damage because its construction occurred before modern building methods and materials became commonplace. However, a newer home can also be more expensive because higher quality materials were used, and the home is larger in size.
One of the biggest factors that affect your flood insurance cost is the level of risk that your home faces. FEMA provides a Flood Map Service Center (MSC) that provides information for the National Flood Insurance Program (NFIP). This map allows you to determine the risk of flooding for a particular property.
The map outlines how areas are more or less at risk of flooding. They are then ranked into several categories. Insurance costs can vary greatly based on the zone.
When looking at flood zone AE vs X, you’ll see that these represent opposite ends of the risk spectrum. Purchasing flood insurance for a home in an AE zone will be significantly more than insurance in an X-500 zone.
Type of Coverage
The more coverage you want, the more expensive your policy will be. Purchasing a bare-bones policy can save you money on the premium. However, it could cost you more in the long run due to the lack of coverage you’ve purchased.
Deductible and Coverage Limits
Most insurance companies will let you choose your deductible and coverage limit. The deductible is how much you pay out of pocket when you make a claim. The coverage limit is the maximum amount your claim can be.
As a general rule, the lower your deductible and the higher your coverage limit, the more expensive your flood insurance policy will be.
Consider Buying Flood Insurance
If you live in certain zones, your mortgage company will require you to purchase flood insurance. This can present a significant additional cost. That’s why it’s so important to ask, how much does flood insurance cost?
Knowing what factors go into determining the cost can help you understand flood insurance better. It will also help you understand the risk you face when living in a home that’s zoned a high risk for flooding.
Browse our other finance articles for more helpful advice so that you can make smart money decisions.