Last month we detailed what flood insurance is, what it covers and who needs it. In this final installment of our two-part series, we explain the price tag associated with this type of insurance, how this coverage works and compare the different kinds of flood insurance.
The Cost
As with any type of insurance, higher risk means higher premiums. According to NerdWallet the national average cost for homeowners is $899 annually (about $75 a month), while rental property flood insurance is $500 annually.1 Federal law caps annual premium increases at 18 percent a year.1
Climate change is reshaping flood risk. The Federal Emergency Management Agency (FEMA) maps often underestimate inland flooding, especially in the Southeast and Central Southwest. In fact, 25 percent of National Flood Insurance Program (NFIP) claims are outside of the high-risk zone.2
To better reflect actual risk, FEMA introduced Risk Rating 2.0, which includes extra variables for each zone such as how much it costs to rebuild and the current flood frequency.
Other risk factors used in rating include:
Preparing to File a Claim
While some policyholders saw rate reductions, others have experienced annual increases of up to 18 percent for several years in a row. It’s estimated that NFIP policies won’t reach full risk-based pricing until 2037.1
You can lower the premium price tag with a higher deductible as well as taking steps to reduce flood damage. These measures include:
Private Insurance vs. NFIP
Since 2020, the private flood insurance market has grown by approximately 20 percent annually while the NFIP market has declined.3 Several factors contribute to this trend.
Private insurers often offer more competitive pricing, higher coverage limits, and customized policies that better meet individual needs. In contrast, the NFIP has a residential claim limit of $250,000, which can leave many properties underinsured.
Regulatory changes have made it easier for homeowners to switch to private flood insurance. Additionally, concerns about federal funding cuts and government shutdowns have led many homeowners to seek more stable options in the private sector.
To ensure a smooth claims process, store your insurance company’s name, contact information, and policy number in a secure location that is unlikely to be affected by flooding.
In addition, keep photos of your appliances along with a record of their model and serial numbers. It's also important to photograph items such as carpet, flooring, wallpaper, and drapes before any damage occurs. If possible, retain swatches or samples of these materials to help verify their quality and value during the claims process.
Once it is safe to reenter your home, document the damage thoroughly before filing a claim. Take clear photos and videos of all affected areas and items, including those you plan to discard. Be sure to capture:
Do this before removing anything or making repairs, as proper documentation is essential for your claim.
Flood insurance offers essential protection, whether through the NFIP or a private insurer. With climate change increasing the frequency and severity of flood events, and with flood risks extending beyond high-risk zones, it’s more important than ever to assess your vulnerability and explore your coverage options.
By taking proactive steps, such as documenting your property, understanding your flood zone, and comparing insurance providers, you can ensure you're better equipped to recover quickly and confidently when disaster strikes.
The information contained herein is for informational purposes only. The information contained herein does not constitute any financial, insurance, investment, legal, or tax advice. MMBB is not liable for any success or failure that is directly or indirectly related to the use of the information contained herein.
Sources:
1How Much Does Flood Insurance Cost? NerdWallet
2The True Cost of Flood Insurance: How Much Does It Really Cost? - Florida Risk Partners
3Flood Insurance Trends Approaching 2026 - JenCapGroup
Translations of any materials into languages other than English are intended solely as a convenience to the non-English-reading public. We have attempted to provide an accurate translation of the original material in English, but due to the nuances in translating to a foreign language, slight differences may exist.
Las traducciones de cualquier material a idiomas que no sean el inglés son para la conveniencia de aquellos que no leen inglés. Hemos intentado proporcionar una traducción precisa del material original en inglés, pero debido a las diferencias de la traducción a un idioma extranjero, pueden existir ligeras diferencias.
You will be linking to another website not owned or operated by MMBB. MMBB is not responsible for the availability or content of this website and does not represent either the linked website or you, should you enter into a transaction. The inclusion of any hyperlink does not imply any endorsement, investigation, verification or monitoring by MMBB of any information in any hyperlinked site. We encourage you to review their privacy and security policies which may differ from MMBB.
If you “Proceed”, the link will open in a new window.
Back to Top
Next