Flood Insurance Basics
Since regular property insurance does not cover flooding, Congress created the National Flood Insurance Program (NFIP). This program allows property owners to purchase federally backed flood insurance to protect against flood damage to buildings and their contents.
Coverage
Anyone can purchase flood insurance. However, people who live in a Special Flood Hazard Area, often referred to as the "100-Year Flood Plain" are required to purchase flood insurance if they have a mortgage from a federally regulated lender. Also, to purchase flood insurance, your property must be located in a community that participates in the NFIP. A flood insurance policy covers damage directly caused by a flood to a home, up to $250,000. For damage to personal property in a covered structure, the limit is $100,000. Nonresidential property and its contents can be insured for up to $500,000.
Cost
Like all insurance, the cost for flood insurance is based upon the risk. Flood insurance premiums for homes outside the floodplain can run as little as $112 a year. Premiums for property in the floodplain are based on the relationship between the structure and the base flood elevation. The cost to insure a structure four feet below the flood elevation will be substantially higher than one just six inches below the flood elevation. This relationship is determined by a Surveyor preparing an Elevation Certificate for the property. According to FEMA, the average homeowners flood insurance premium is about $500 per year.
Questions? Check out our Flood Insurance FAQs here.