Flood insurance isn’t always required, but it is highly encouraged.
But how much is flood insurance and what factors affect the cost?
Florida is no stranger to heavy rains, hurricanes, and storm surges—all of which can lead to serious flooding. But what most people don’t realize is that most policies do not cover flooding.
This means, when the waters start to rise, you may be left paying out of pocket for lost belongings and damage to your home.
There’s no doubt that every Florida property owner needs flood insurance, but when it comes to insurance, the biggest question is often: “Can we afford it?”
Like most other premiums, flood insurance costs will vary depending on your location, coverage, and risk level. Understanding a little about how flood insurance works can help you make informed decisions about the right coverage for you.
How Much Is Flood Insurance?
Many property owners are concerned that adding flood insurance coverage will cause premiums to skyrocket. In fact, flood insurance (yes, even in Florida) is more affordable than you might think. On average, Floridians pay under $800 a year for this crucial form of coverage.
Most flood insurance policies are purchased through the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA), although many private carriers offer flood insurance policies as well. Private carriers can often offer higher coverage limits and more customized policies compared to the NFIP.
As with all insurance policies, the cost will depend on the coverage limits you need and the level of risk associated with the policy.
Comparing NFIP to Private Flood Policies
While it may seem like the NFIP has less expensive policies than private flood insurance, they also have fewer coverage options available to you.
For instance, coverage limits through the NFIP are limited to $250,000 for building coverage and $100,000 for contents coverage, which isn’t enough for everyone. With a private insurance carrier, you have fewer coverage limitations and can adjust your policy to match your needs.
NFIP policies also all have a 30-day waiting period before they take effect while private flood potentially has shorter wait periods or none at all depending on the carrier. Whichever option you choose, you should not wait until hurricane season begins to secure a policy.
Private carriers can also offer additional coverage for detached structures, additional living expenses, pool repair, and more.
Private flood insurance can cost more in terms of your premiums, but you also have far more options regarding your coverage than you do with the NFIP.
Why Does Flood Insurance Cost What It Does?
One of the biggest influences on flood insurance rates is flood zones, which categorize areas based on their likelihood of flooding. Homes and businesses in high-risk areas tend to have higher premiums, while those in moderate-risk areas often pay less.
But here’s the thing: flood zone designations don’t tell the whole story!
Flood zone maps help determine how much flood insurance costs and whether it is required, but not whether it’s needed. In fact, a significant percentage of flood insurance claims come from moderate- and low-risk zones.
The stark reality is that flooding can happen anywhere, at any time. And when disaster strikes, the cost of not having insurance is far greater than the cost of a policy.
Flood Insurance for Businesses
Flooding isn’t just a concern for homeowners—it can be a devastating event for business owners as well. Even a few inches of floodwater can cause thousands of dollars in damage to equipment, inventory, and your building’s structure.
Unfortunately, many standard commercial property insurance policies do not cover flood damage.
For businesses, flood insurance provides crucial financial protection, covering both the physical structure of the building and business property inside, including furniture, machinery, computers, and inventory. Business owners can also purchase business interruption coverage as part of a private flood insurance policy, helping cover lost income if your business is forced to shut down due to flood damage.
Like residential policies, commercial flood insurance rates depend on factors such as location, building structure, and coverage limits. However, businesses often require higher coverage amounts, so understanding your specific flood risk and policy options is key.
What Factors Determine Your Flood Insurance Rate?
There are a number of factors that will determine your flood insurance costs; and while some of them may lie outside of your control, having a full picture can help you better anticipate costs and even find ways to lower your premiums.
1. Flood Zone Classification
One of the most significant factors is what flood zone the property is in.
High-risk areas typically come with higher premiums since flooding is more likely. Moderate-risk areas may have lower rates, but again—this doesn’t mean they’re immune to flooding.
However, FEMA updates their flood maps regularly, so flood zones can change rapidly. Your property may have been in a low-risk area 10 years ago, but it may be high-risk now. You can check your property’s current flood risk by using FEMA’s flood map.
2. Coverage
The more coverage you have, the higher your premiums will be. Policies with broader coverage and higher coverage limits may cost more, but they also provide more financial protection in the event of a flood.
Flood insurance is typically divided into two types of coverage:
- Building Coverage – Protects the building’s structure.
- Contents Coverage – Covers personal belongings like furniture, electronics, and clothing.
These coverages are often priced separately, so property owners can adjust their policy to fit their needs as well as their budget.
3. Elevation & Property Features
Your business or home’s design can also impact your flood insurance costs. For example, properties built at higher elevations or with flood-resistant features often qualify for discounted premiums.
Factors like foundation type, the slope of the yard, and even where your water heater is located can all help lower your rates.
How to Lower Your Flood Insurance Costs in Florida
Flood insurance is a crucial investment, but it doesn’t have to break the bank. In fact, there are several ways to reduce your flood insurance premiums (without sacrificing good coverage).
1. Get an Elevation Certificate
If your property is in a high-risk flood zone, an elevation certificate could help you secure a lower premium. These documents verify your first floor’s elevation in relation to the base flood elevation (BFE) for your area. Buildings elevated above the BFE may qualify for a lower rate since they have a lower risk of flood damage than the homes around them.
Not everyone will be able to get an elevation certificate, but if you qualify, it can provide significant savings.
2. Choose a Higher Deductible
Like other types of insurance, flood insurance includes a deductible, which is the amount you’ll have to pay out of pocket before your coverage kicks in.
Opting for a higher deductible typically results in lower monthly premiums; however, this means you’ll pay more out of pocket if you file a claim, so it’s important to choose a deductible you can afford.
3. Lower Your Flood Risk
The less risk your area poses for flooding, the more likely you are to receive lower rates. Certain home improvements can help:
- Elevate essential systems like water heaters, electrical panels, and HVAC units above flood level.
- Install flood vents to allow water to flow through and reduce pressure on the foundation.
- Use water-resistant materials in basements or lower levels to minimize damage.
- Improve drainage around your property by adding landscaping or sump pumps to redirect water away from your home.
Even if you’re not in a high-risk area, these upgrades not only lower premiums, they can reduce potential damage.
4. Work with an Independent Insurance Agent
Finally, whenever you’re purchasing insurance, work with an independent insurance agent to make sure you’re getting the best deal.
Because they aren’t tied to a specific insurance company, independent agents can collect quotes from private flood insurance companies as well as the NFIP and even provide invaluable advice on the types of coverage you need most.
Protect Your Home and Your Wallet
Flooding can happen at any time; don’t wait until it’s too late to buy flood insurance! Whether you live in a high-risk area or not, having the right coverage ensures that the next unexpected disaster doesn’t leave you high and dry.
While the cost of flood insurance can vary, remember that there are things you can do to reduce your rates—especially working with an independent insurance agent like Harry Levine Insurance.
At HLI, we specialize in helping Floridians find the best insurance to protect their assets and their wallet. With more than 40 years in the industry, HLI is the agency you can trust.
Call today for a free quote.
