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Return To: Flood Insurance – The Ultimate Guide
If you live in North Carolina, from the beaches of Wilmington, to the mountains near Hendersonville, or even in the middle of the state near Greensboro or Clemmons you’ve probably experienced some form of flooding in your life.
Homeowners insurance typically doesn’t cover flood damage so it’s in your best interests to get understand the basics of flood insurance.
Your mortgage company might also require flood insurance coverage especially if your area is in a flood-risk zone.
How Much Does Flood Insurance Cost?
The average cost of flood insurance is $700, but the amount may change according to your home’s location and the materials used to build it.
Until recently, you could only get flood insurance from the NFIP. In 2019, they opened the doors to private insurance companies. Now there are over 100 companies offering flood insurance companies in the United States.
The flood insurance premium amount varies according to plenty of different factors.
What Factors Determine Flood Insurance Cost
Private Flood Insurance vs NFIP Flood Insurance
As a homeowner, you can get flood insurance either from private insurance companies or the NFIP.
The NFIP is a program created by the US Congress to help those who are in flood-risk areas and those who live in floodplains. The NFIP will pay on flood claims for up to $250,000 for damage to your home, and an additional $100,000 for your belongings inside the flood-stricken home. You can book a call with your insurer who most likely sells flood insurance from the NFIP, or who can refer you there. You’ll then get to choose a deductible that suits your budget for both your building and property coverage.
Private insurance companies that offer flood insurance have more leeway when it comes to their coverage, unlike NFIP policies that have set limits. For one, they have higher claim limits and can also include living expenses coverage in the event that your home becomes uninhabitable due to the flood. Furthermore, if you want to cancel your private flood insurance policy you may do so, unlike with NFIP.
Take a look at how NFIP differs from private insurance companies flood coverage:
|Private flood insurance||NFIP|
|State availability||Varies, depending on company||50, plus U.S. territories|
|Coverage (Building)||Actual cash or replacement cost value, depending on policy||Building coverage is at least 80% of the full replacement cost of the building, or is the maximum amount of insurance coverage available.|
|Coverage (Contents)||Actual cash or replacement cost value, depending on policy||Actual cash value, up to $100,000|
|Alternative Living Expenses (ALE) or Loss of Use||Yes, depending on company and policy details||No|
|Debris Removal||Yes, depending on company and policy details||Yes|
|Certificate of Elevation Requirement||No, but having one may make you eligible for discounts||Yes, if your home is in a high-risk area|
|Waiting Period||15 days or less||30 days|
|Accepted by Lender||Yes||Yes|
|Rebuild limit||$500,000 or more, depending on policy||$250,000|
|Insurer may cancel policy||Yes||No|
The Type of Construction Helps Determine Flood Insurance Cost
Your home’s age and occupancy will also be taken into consideration when calculating your flood insurance deductible. Your insurance provider will also check how elevated your home’s base floor is. Your building structure and the contents coverage you have is also regarded.
Base Flood Elevation
The BFE is pulled from historic weather data to which the water is assumed to rise when it floods. The BFE works hand in hand with the flood insurance zones to determine the likelihood of potentially destructive flooding that could occur in your area.
Flood Insurance Zones
The Federal Emergency Management Agency (FEMA) regularly publishes detailed flood plans. Flood zones indicate the likelihood of a flood occurring in an area, and this is considered when determining your flood insurance deductible. Keep in mind that the percentages stated are the probability of flooding in the whole area (and not each individual home). The most hazardous flood zones are those that start with A or V.
How Much Does Flood Insurance Cost In Zone AE
For homes in Zone AE, there is a 1% chance of flooding annually and a 26% chance of flooding in a 30-year mortgage. It’s highly recommended to get flood insurance if your home is in this zone.
Insurance for homes in this flood zone range anywhere from $1,000 to $10,000.
How Much Does Flood Insurance Cost In Zone A
Much like the aforementioned Zone AE, homes in Zone A also have a 1% chance of flooding annually and a 26% chance of flooding in the span of 30 years.
How Much Does Flood Insurance Cost In Zone X
For homes in Zone X, there is little to moderate chance of flooding at only 0.2 to 1% annually. It’s generally not required to purchase flood insurance if you live in this area, but it is available should you want it.
For homes in this area, the flood insurance premium is at $4,000 yearly.
How to Lower Flood Insurance Rates
Here are a number of ways you can lower your flood insurance premium which are in your control:
If your home has utilities (water heaters, electrical, plumbing, or ventilation) and is located below the BFE, it will be quoted with a higher premium. You can build a utility shed that is above the reported BFE to house your utilities.
If your home has a basement, it won’t be favored positively by flood insurance companies. Newly-built homes with basements in flood-risk areas are actually not covered by NFIP. To save money on premium fees, you can consider filling in your basement.
If you have the money to spend, consider elevating your home above the BFE levels. This will save you hundreds of dollars in premium yearly in the long run.
The Bottom Line
If your home is at risk of flooding, or you just want to be prepared should a flood strike, consider getting flood insurance. With the above insight and tips, you can easily choose flood insurance to suit your specific needs and gain a lower premium. Different aspects such as location, building construction, and elevation are all important aspects to consider when thinking about flood insurance.