How much does flood insurance cost?

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Flood insurance helps protect you from financial devastation if your home and possessions are damaged by flooding. According to floodsmart.gov, one inch of water can cause $25,000 in water damage to your home. Flood coverage is generally excluded from most home insurance policies. To obtain coverage, you typically need to purchase a separate policy.

The average cost of flood insurance in the United States is $700 per year. Although many homeowners do not consider flooding to be a significant risk unless they live in a high-risk area, the Federal Emergency Management Agency (FEMA) reports that, between 1996 and 2019, 99% of U.S. counties were affected by at least one flooding event. The 10 most significant flood events based on National Flood Insurance Program (NFIP) payouts have happened since 2001. Understanding the cost of flood insurance may help you to decide if purchasing a policy is right for you.

Factors that determine flood insurance cost

The average U.S. homeowner pays $700 per year for a flood insurance policy. However, flood insurance rates vary greatly depending on your rating factors. While the best way to know how much your flood insurance will cost is to get a quote, understanding the factors that determine your premium could be helpful.

If you have a mortgage or other type of home loan, your lender will require you to buy a flood insurance policy if your home is in a flood zone. Flood policies are generally required to be paid in full, either by you directly or out of your mortgage’s escrow account.

Flood risk

The first thing, and perhaps the most significant factor, that determines the cost of flood insurance is the historical risk of flooding in your region. Most places in the U.S. have at least some flood risk. But in places where flooding is more common, flood insurance costs more. To find how much of a risk flooding is in your area, check out FEMA’s flood maps for your region.

Where your home is specifically located within a floodplain also plays a role in the cost of flood coverage. Your home may be located within a floodplain, but your flood insurance could be lower if your house is built on a hill or other elevation.

Home age and construction

Flood insurance providers also pay close attention to how your home is constructed and how old it is. Older homes built before modern construction materials and techniques may be more vulnerable to damage caused by flooding. Some modern building techniques may help mitigate flood damage, like including floor openings for water to drain out more quickly.

Type of coverages

There are only two coverages on a flood insurance policy: building coverage and contents coverage. Choosing a policy with no contents coverage will likely be cheaper than choosing a policy that includes both coverages but could leave you financially vulnerable if a flood destroys your home and everything in it.

Coverage limit and deductible level

Generally, the more coverage you purchase, the higher your premium will be. This applies to both building coverage and contents coverage. Your deductible, which is the amount of money you will pay out of pocket if you file a claim, also impacts your premium. Typically, the higher your deductible, the lower your premium will be.

Type of policy

Depending on your home’s location, you may qualify for an NFIP Preferred Risk Policy (PRP). If your home is located in a low-risk flood area, you may be able to purchase valuable flood insurance coverage at a lower price. However, Preferred Risk Policies are not available to all homeowners. Standard policies are often the only option for homes located in high-risk flood areas.

Insurance company

Historically, flood insurance was only offered by the NFIP. Although various insurance companies sold NFIP policies, the rates were standardized no matter what company you purchased coverage from. However, within the last several years, private insurance companies have begun to sell and underwrite their own policies. Now, with more companies selling flood insurance, you can get several flood insurance quotes to compare coverages and premiums, just like you can with homeowners insurance quotes.

Risk Rating 2.0

Starting in October 2021, FEMA is rolling out a redesigned NFIP rating strategy called Risk Rating 2.0. If you have a current NFIP policy or purchase an NFIP policy in the future, your premium will likely be impacted.

Currently, flood rates are heavily determined by your home’s location within a floodplain and its elevation. Risk Rating 2.0 is designed to more accurately determine rates based on a variety of factors. The new rating system will include factors like flood frequency, the type of flood risk in a given area (storm surge, river overflow, heavy rainfall, etc.), distance to a water source, your home’s rebuilding cost and your property’s elevation.

Risk Rating 2.0 is designed to help reduce the disparity between flood insurance costs for lower-valued homes and higher-valued homes. The new rating will begin on October 1, 2021 for new policies. Existing policies will roll into the new rating system at their renewals on or after April 1, 2022.

The word “flood” is often used to describe any kind of water damage, but flood insurance is designed to cover a particular set of circumstances.

Flood insurance covers damage caused by weather-related floods, including heavy rainfall, storm surges and overflowing bodies of water. Many homeowners will use the term “flood” when discussing other types of water damage. If heavy rains cause a sump pump to fail and water backs up into your basement, that is not a flood. Water damage from a broken pipe is also not a flood. Coverage for damage caused by these instances may be covered on your homeowners insurance, depending on the coverages you have.

According to the National Flood Insurance Program (NFIP), flood insurance covers:

Building coverage

  • Plumbing and electrical systems
  • Water heaters and furnaces
  • Cooking stoves, refrigerators and built-in appliances (like dishwashers)
  • Permanently installed carpeting
  • Permanently installed bookcases, cabinets and paneling
  • Window blinds
  • Foundation walls, anchorage systems and staircases
  • Detached garages
  • Fuel tanks, well water tanks and pumps and solar energy equipment

Contents coverage

  • Personal belongings such as furniture, electronic equipment and clothing
  • Curtains
  • Washer and dryer
  • Portable and window air conditioners
  • Microwave oven
  • Carpets not included in building coverage (such as carpet installed over wood floors)
  • Valuable items such as furs and original artwork (up to $2,500)

Keep in mind that these coverage details are from the policies offered by NFIP. Private flood insurance providers may have different coverages.

How to save money on flood insurance

You can explore several steps to protect your property from flood damage, and these actions can help you pay less for flood insurance each year. Here are some of the top recommendations from the NFIP.

Elevate your utilities

Elevating electrical panels, heating and cooling systems, water heaters and other utilities on a platform above the base floor elevation of your home can help reduce the likelihood of damage from a flood and thus save you money on your premium.

Elevate your property

It may seem like a big undertaking, but the NFIP calls this action the fastest way to reduce flood insurance costs. In fact, if you live in a high-risk flood zone, you might save hundreds of dollars every year for each foot that your home is elevated above your community’s base floor elevation. Obtaining an elevation certificate, which plots your home’s specific elevation on your property, could drastically reduce your premium.

Maintain or install flood openings

For insurance purposes, the NFIP requires all new home building and basement renovations in high flood-prone areas to have flood openings below the lowest elevated floor of the home — typically on at least two exterior walls. If your home does not have flood openings, adding them could lower your premium.

Fill in your basement

Basements, being below ground level, are at high risk for severe flood damage. Water can rush in and has no way to drain out. Although filling in a basement may seem like a drastic step, it could save you quite a bit of money on your flood insurance. If you are a new homebuyer and looking at homes in flood plains, purchasing one without a basement might be a prudent financial choice.

Increase your deductible

Most flood policy deductibles start around $1,250 and can go up to $10,000 or higher, although this may vary between NFIP policies and private carriers. The higher your deductible, the more money you will have to pay out of pocket if you file a claim. Just like with homeowners insurance, a higher deductible generally leads to lower premiums. Because you will be responsible for paying your deductible if you file a claim, make sure you choose a level that makes financial sense for you.

Frequently asked questions

What is the best home insurance company?

Both flood insurance and home insurance are highly personalized purchases. Because of this, the best companies will vary based on the features you are looking for, the aspects that matter most to you and your rating factors. Getting quotes from several companies may help you find a company that fits your needs.

Does flood insurance cover sewage backup?

No, sewage backup is not covered by flood insurance. Flood insurance only covers flood damage from natural disasters. Your home insurance may cover damage caused by water or sewer backup, though, but only if you have a water backup endorsement on your policy.

Is flood insurance required?

Flood insurance is not required by law, but you may need to purchase a policy if your home is located in a flood zone and you have any kind of home loan, including a mortgage. But even if you do not have a home loan, flood insurance may be a good purchase to protect yourself against the financial stress of repairing flood damage. In many cases, flood insurance premiums must be paid in full upfront.

How quickly can I get flood insurance?

Flood insurance policies backed by the NFIP have a standard 30-day waiting period. This is to prevent homeowners from buying coverage when a flood event is imminent; in that situation, a company may not have enough financial backing to pay for the influx of claims. The waiting period can be waived in some situations, such as a home closing, flooding after a wildfire or if your home has been added to a high-risk area due to a flood map change.

Written by
Cate Deventer
Insurance Editor
Cate Deventer is a writer, editor and insurance professional. She is currently pursuing a Bachelor’s degree in English with a concentration in professional and technical writing from Indiana University East. She began writing for Bankrate in January 2021 and has nearly a decade of experience in the insurance industry as a licensed insurance agent. Cate has worked with over a dozen insurance companies and is experienced with auto, home, flood, umbrella and life insurance.
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