Factors that determine the cost of flood insurance
Many factors can influence the cost of a flood insurance policy, including things like the home’s location (and the risk of flood it carries), the type and amount of coverage you’re purchasing, the age and structure of your home, the policy’s deductible, and more.
A home’s location — and specifically how at risk it is for flooding — plays a huge role in the cost of flood insurance. Insurers consider a home’s distance to potential flooding sources (oceans, lakes, rivers, etc.), the elevation of its lot, and other community characteristics when evaluating its flood risk. Generally speaking, the higher the risk of flooding, the higher the premium will be.
Home or building specifics
How your home was built is a factor, too, as this can influence how likely it is to be damaged in a flood.
Here are just a few of the building characteristics FEMA says will come into play:
Foundation type and location (underground, at ground, above ground)
Number of floors and height of the first floor
Unit location (for multi-family units)
Presence of any flood openings
These factors “provide a deeper understanding of the building’s individual flood risk” and allow insurers to set more accurate premiums based on it, according to FEMA.
Learn More: Flood Insurance: The Ultimate Guide for Homeowners
You can get a flood insurance policy through the National Flood Insurance Program or through a private insurer. Private policies may be more customizable and can often be bundled with other insurance plans, which could mean lower-cost coverage. It ’s always important to compare both options when getting flood insurance, especially if you’re on a tight budget.
The amount of coverage your policy has — meaning how much it will pay out in the event of a flood — is another big factor in setting your flood insurance premium. Policies with higher coverage amounts, for which insurers are on the hook for larger payouts in a flood, will come with a higher premium. With NFIP plans, the most coverage you can get is $250,000 in building coverage and $100,000 in contents coverage.
Helpful Read: How to File a Flood Insurance Claim
The deductible is the portion of costs you’re responsible for before your insurance company will cover any damages. High deductibles mean the insurer has fewer potential losses and can offer a lower premium. Policies with low deductibles are riskier for insurers and come with higher premiums.
Premiums on flood insurance policies — and any type of insurance, for that matter — vary by insurance company. This is due to the unique overhead costs, staffing, and appetite for risk that each insurer has.
Always make sure to compare a few different insurance companies to be sure you’re getting the best deal. Currently, the top flood insurance companies include Zurich Insurance Group, American International Group, Assurant, AXA, and Swiss RE.