While flooding may qualify as an insurable Act of God in your eyes, it is not part of standard homeowners insurance coverage. That doesn’t mean that financial protection against such a natural disaster is unavailable, however. You can add specialty flood insurance to your array of coverage products if you’re willing to pay extra for it.
Flood insurance can cost anywhere from a few hundred dollars annually to thousands of dollars per year based on the following factors.
1. Flood zones
Flood zones can range anywhere from very small risk to high likelihood for flooding. In general, high risk zones come with higher flood insurance cost for annual premiums. In calculating your premium cost, among an insurance company’s first steps is to check your home’s flood zone. This is public information available on a community’s flood map, and you can discover your flood zone risk through the FEMA Flood Map Service Center by entering your address in a search.
Tip: Flood insurance costs less in areas with low- to moderate-risk flood zones, qualifying for low rates under preferred risk policies (PRPs).
2. Home location
Location continues to play a role in your flood insurance cost beyond the flood zone ranking, which tends to increase with proximity to bodies of water. The elevation of your home in relation to base flood levels is another big factor in the calculation of flood insurance premiums. In general, the higher your home lays above the base flood elevation, the lower your annual flooding insurance premium will be and vice versa.
3. Contents location
Since the contents of your home may also be protected under flood insurance, their location in your home can also affect premium costs. For instance, if your utilities are elevated above base flood levels, this positively reflects in your flood insurance cost. If your most valuable contents, on the other hand, reside in lower levels, it may negatively impact how much you pay for flood insurance.
4. Type of coverage
Flood insurance protects both the components of your home and personal possessions, but the breadth of your coverage for these things define the type of flood coverage you have. The most comprehensive flood insurances protect your home’s foundation, the electrical and plumbing within, appliances, finishings, electronics, and personal belongings. It’s often possible to mix and match how much coverage you want for each type of thing, determining the nature of your overall policy.
5. Deductible amount
As with other types of insurance policies, the amount you select for your deductible greatly impacts flood insurance cost. Higher deductibles mean lower annual payments for your flood policy, but it also means more out-of-pocket costs if you have to file a claim. A lower deductible comes with higher insurance payments, but it may be a better option if your home is at higher risk for flood damage. You also can select different deductibles for protections for the actual home and for your possessions.
Some insurance companies offer flood insurance separately for the building and its contents. Be sure to discuss what is and isn’t covered under your policy and the flood insurance cost before you commit. Also, be aware that flood insurance is usually required in high-risk areas if you’re still carrying a mortgage.