Most standard home insurance policies don’t cover damage caused by flooding — or, as insurers call it, “an excess of water on land that is normally dry.”^[1]

Unfortunately, thanks to climate change, floods have become more common than ever — even in areas not typically prone to flooding. To ensure your home is protected in case of a flood, you’ll need a separate flood insurance policy.

Here’s what you need to know about this coverage, as well as what it costs.

What is the typical cost of flood insurance?

The average cost of flood insurance — at least through the federal government’s National Flood Insurance Program — runs around $818 per year.^[2] The exact price you’ll pay depends on a number of factors (see below).

While it sounds pricey, the premium pales in comparison to the typical costs of a flooding event.

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.^[4]

Flood risk

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:

• Occupancy

• Foundation type and location (underground, at ground, above ground)

• Number of floors and height of the first floor

• Unit location (for multi-family units)

• Masonry type

• 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.^[5]

Learn More: Flood Insurance: The Ultimate Guide for Homeowners

Policy type

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.^[2] It’s always important to compare both options when getting flood insurance, especially if you’re on a tight budget.

Coverage amount

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. ^[5] [6]

Helpful Read: How to File a Flood Insurance Claim

Deductible amount

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.^[5]

Insurance company

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.^[7]

Risk rating 2.0: What you should know

Risk Rating 2.0 is the methodology that FEMA uses to evaluate a property’s risk of flooding. The system, which officially went into effect on Oct. 1, 2021, is designed to be more customized than previous methodologies were.

“​​Since the 1970s, rates have been predominantly based on relatively static measurements, emphasizing a property’s elevation within a zone on a Flood Insurance Rate Map,” FEMA explains. “This approach does not incorporate as many flooding variables as Risk Rating 2.0. Risk Rating 2.0 is not just a minor improvement, but a transformational leap forward. Risk Rating 2.0 enables FEMA to set rates that are fairer and ensures rate increases and decreases are both equitable.”^[8]

Flood insurance costs by state

Your home’s location — and specifically the risk of flooding that location comes with — has a big impact on the costs of flood insurance. Just take a look at the Insurance Information Institute’s list of top states for storm surge losses to see why.

In Florida (the No. 1 most at-risk state), more than 2.8 million single-family homes would be at risk in a Category 5 hurricane, equating to about $580 trillion in reconstruction costs. New Hampshire, on the other hand (at No. 19 for risk), has just 9,336 homes at risk for about $4.5 trillion in damages.[1]

As you can tell, Florida presents a much higher potential loss than New Hampshire and would likely require a higher-cost policy to insure a home.

Check Out: Flood Insurance: Definitions and Other Important Terms

What flood insurance covers

Flood insurance covers the costs to repair or replace items that are damaged by flooding. This can include replacing appliances, carpeting, or blinds, repairing your foundation, or even covering clothing or furniture that’s been lost in a flood. These items fall under the two main umbrellas of flood insurance coverage: building and contents.

Building

Building coverage protects the structure of your building, permanently installed and built-in items, and major functional systems, like electrical and plumbing.

Here’s a list of what the building portion of a flood insurance policy generally covers:

• Furnaces, water heaters, fuel tanks, well water tanks and pumps, and solar energy equipment

• Major appliances like refrigerators, stoves, and dishwashers

• Carpeting and blinds

• Built-in/permanently installed cabinets, paneling, and shelving

• Detached garages

• Foundation walls, staircases, and anchorage systems

• Electrical, plumbing, and HVAC systems

If these items are damaged on a primary residence, the policy pays out on a replacement cost basis — meaning what the item costs to replace as new in today’s market (not factoring in depreciation or condition of the item).

Contents

Contents coverage is for the items contained in your home — your personal belongings and valuables.

This can include things like:

• Furniture

• Portable appliances like washers, dryers, and microwaves

• Electronics

• Clothing

• Curtains

• Artwork

When these items are damaged in a flood, the policy will pay out based on the actual cash value of the loss — meaning what the item is worth considering its age and condition.^[1] [1]

Where to buy flood insurance

You can get flood insurance through the federal National Flood Insurance Program, if your community participates in it, or through private insurance companies.

National Flood Insurance Program (NFIP)

The National Flood Insurance Program is a federal insurance program that operates in thousands of communities nationwide. To see if your county participates, check FEMA.gov’s NFIP database.

Private insurers

If your community doesn’t participate in the NFIP program, or you just want to explore other options, private companies sell flood insurance policies, too. These can often be more customizable (and more comprehensive) than NFIP plans, and you may be able to bundle them with existing insurance policies.

One advantage of private policies is that limits are higher. Progressive, for example, offers private flood insurance with up to $500,000 in building coverage. NFIP’s plans max out at $250,000. Private plans may also have shorter waiting periods.

To get private flood insurance, you’ll simply need to find a few insurers offering flood policies, get customized quotes, and decide who to go with. You might want to start with any existing insurers you already work with. This could qualify you for bundling or multi-line discounts.^[2] [1] ^[10]

Who needs flood insurance?

People living in areas at high risk of flooding should consider flood insurance. If your home is in a high-risk flood zone and you have a federally backed loan (FHA, VA, or USDA), then you’ll legally need a flood insurance policy.^[8] If you have a conventional or other type of mortgage, there’s a chance your lender will require one, too, so be sure to read your closing documents.

Even if you’re not in an area at high risk of flooding, it may still be smart to consider flood insurance. Flooding events have increased in recent years due to climate change, and even historically lower-risk areas have been impacted. In fact, according to FEMA, 40% of NFIP flood insurance claims come from properties in non-high-risk parts of the country.^[5]

Having flood insurance could provide much-needed financial protection should a flood occur in your area. The average homeowner impacted by Hurricane Katrina had a $95,000 loss, according to the Insurance Information Institute. For 2017’s Hurricane Harvey, that number was $117,000.^[11]

Learn More: Hurricane Insurance: What You Need to Know

How to save money on flood insurance

If you want to reduce the cost of your flood insurance premiums, lowering your property’s flood risk — or the amount your insurer would have to pay in the event of a flood — can help you save.

Here are a few strategies that, can reduce your premium according to the NFIP:

• Install flood openings. Flood openings, also called flood vents, prevent water from building up under your foundation and can help reduce your home’s flood risk.

• Increase your deductible. The higher your deductible, the less your insurer has to pay if a flood damages your property.

• Raise your utilities. Elevating your utilities — that is, getting your HVAC, electrical panel, water heater, etc., off the ground — can greatly reduce their chance of sustaining flood damage.

• Fill in your basement. If you have a basement in a high-risk flood zone, it can mean a premium that’s up to 20% higher. Filling in your basement can be a smart way to reduce your home’s risk.

• Elevate your property. Lifting your house can help reduce its risk of sustaining flood damage, too. Adding a new upper story can also qualify as elevating your house.^[12] [13]

Finally, when buying a house or moving, always assess flood risk levels in the area. FEMA has flood maps you can use to gauge the risk of a house or area you’re considering moving to.

Flood insurance FAQs