What Does Flood Insurance Cost?
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You’ve fallen in love with that charming little house near the river. But if you buy that home, your mortgage lender will require you to buy flood insurance. Will the extra expense put your dream home out of reach?
Your flood insurance cost will depend on many factors, including the size, location and elevation of the house. To get a rough idea of what you can expect to pay, check out the average costs below.
How much is flood insurance?
The average flood insurance cost in the U.S. is $771 a year, according to NerdWallet’s analysis of 2022 National Flood Insurance Program rates. (This figure doesn't take into account policies bought through companies that aren't backed by the NFIP.)
Flood insurance for renters can be much cheaper if you need to cover your personal belongings only. The NFIP advertises rates as low as $99 a year for contents-only coverage.
Below are the average flood insurance rates for each state, according to NFIP data.
Average annual rate
Risk Rating 2.0
In October 2021, the Federal Emergency Management Agency began using an approach called Risk Rating 2.0 to set flood insurance rates. FEMA now includes extra variables such as flood frequency and rebuilding cost when evaluating each home’s chance of flooding. The methodology is part of an effort to set fairer prices for flood insurance.
People buying a new flood insurance policy will pay the new rates immediately. Existing policyholders whose rates are set to increase will see the higher premiums with their renewal.
FEMA says that flood insurance premiums dropped for about 23% of existing policyholders under the new methodology, while everyone else will pay the same or more. In most cases, federal law prevents your premium from going up by more than 18% in any given year. (Exceptions include vacation homes and properties that have had multiple severe flood claims.)
Because of this cap, some policyholders may see their premiums rising year after year until their rate reflects what FEMA sees as the property’s true risk. The agency estimates that about 50% of primary residential policies will have reached their full risk rate after five years of increases, according to a recent report to Congress. It’ll take 10 years of rate increases before 90% of policies will be at their full risk rate, the report says.
What affects your flood insurance cost?
Many factors determine how much you’ll pay for flood insurance.
Your home’s location and characteristics
Under Risk Rating 2.0, FEMA looks at not only which flood zone your home is in but also how likely your property is to flood. Your home’s flood insurance rate could vary based on answers to questions similar to these:
How close is the house to a river or other flood source?
How much would it cost to rebuild your home?
How high is the first floor?
How often does the surrounding area flood?
Together, these and other factors determine how likely it is that a flood could damage your home. In general, the higher the risk, the more you’ll pay for flood insurance.
If you live in a place that takes certain steps to lessen its risk of flood damage, you could be eligible for a discount on your flood insurance. These steps could include managing stormwater, maintaining levees and requiring real estate agents to disclose when a property is prone to flooding.
Your coverage and deductibles
The more coverage you need, the more your insurance will cost. So a small home that needs only $125,000 of building coverage will generally have a lower flood insurance rate than a larger one that needs the NFIP’s maximum of $250,000 in coverage (all other factors being equal).
Choosing a higher deductible — the amount of a claim you pay yourself — will generally lower your premium.
How to save on flood insurance
Once you’ve decided on a flood insurance carrier, there are ways to shave a bit off your premium.
Reduce your flood risk
If you take steps to reduce your home’s chance of flood damage, you could see a discount on your insurance. The NFIP recommends:
Installing flood vents on exterior walls.
Filling in your basement or crawl space.
Moving your HVAC systems, water heaters and other utilities to an attic or elevated platform so they’re at less risk of flood damage.
Elevating your house or moving it to a new location.
Submit an elevation certificate
An elevation certificate shows the elevation of your home’s lowest floor, plus the building’s location and features. The NFIP doesn’t require you to have an elevation certificate to get a policy. But sometimes providing your insurance agent with a certificate could help you qualify for a lower rate.
To get an elevation certificate, ask your local floodplain manager if there’s one on file for your home. You can also check whether your property deed includes an elevation certificate.
If your home doesn’t have an elevation certificate, you can hire a land surveyor, engineer or architect to create one.
There may be private insurance companies in your area that will cover your property at a lower rate than the NFIP. You can find them by contacting a local insurance agent. Learn more about private flood insurance.
Adjust your deductible or coverage limits
As noted above, choosing a higher deductible or buying less coverage can help you lower your annual flood insurance cost. But either option will leave you responsible for paying more in the event of a claim. Be sure you can afford to come through with the cash if needed.