A flood insurance policy is one of the most important protection you will need if you live in a flood prone area.

In our previous article, we talked about some interesting facts about flood insurance but in this article, we will discuss the different reasons why you need a flood insurance policy, the cost of flood insurance by state, coverage and possibly how you can get a reasonable cost. Flood insurance rate in the United States.

1. Flooding is not covered by homeowner’s insurance

Although a homeowners insurance policy covers lightning, volcanoes, and everything else that falls from the sky like a tree destroying your roof, it does not cover flooding.

For a level of financial protection when rain takes over your building, you will need a flood insurance policy from an insurance company near you.

2. Most homes in the United States are at risk of flooding

In the United States, 142 homes and properties have been awarded a flood risk rating by the First Street Foundation. With a tool like Flood Factor, you can learn for free if a property has been flooded from major events in the past, is currently at risk, and how that risk changes over time.

3. Areas perceived as having low flood risk are more dangerous than you think

According to the FEMA report, those who live in a low to moderate risk area are still suffering from devastating floods. Their chances are five times higher than that of a fire over a 30-year period. Flood insurance statistics show that homes in these areas account for about a fifth of all flood insurance claims.

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4. Floods for 100 years can occur more frequently than expected

The term “100-year flood” is used in an attempt to simplify the definition of a flood that has a statistically 1 percent probability of occurring in any given year.

How often do 100-year floods occur? Over the course of a million years, these 100-year floods can occur 10,000 times. However, we have cases where it happened more than once a year.

In the mid-2000s, in Goffstown, New Hampshire, USA, a 100-year flood occurred twice within a year.

5. Flooding is one of the most common natural disasters in the United States

In the United States, and especially in states like Texas, Florida, and Louisiana, floods are the most common natural disaster.

How much did the flood cost the US and the UK government

Floods contribute to 90% of all natural disasters, according to the Insurance Information Institute.

6. Correcting flood damage can be very expensive

In 2019, floods and flash floods caused an estimated $3.75 billion in damage to property and crops in the United States.

Just an inch of water in your backyard can result in a huge loss of profits. One foot of flood is enough for cars to begin to float.

In England, about 2.4 million people live in areas at risk of flooding. To help make life go smoothly for this population, the UK government is spending £4.4 billion on flood defence. While others are waiting for help from the government, a flood insurance policy will help you save on the cost of repairing and replacing damaged property.

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7. Waiting for FEMA may not always help

Joe Biden discusses with FEMA about the flood disaster
Image source: CNN

There are instances where FEMA fully steps in to help you but this can only happen if the President of the United States declares it a disaster. Unfortunately, this does not happen in all flood situations.

In addition, most FEMA aid comes in the form of a low-interest loan. Not everyone is lucky to get an FEMA grant, and even if you do, you won’t be able to cover as much of your flood insurance policy as possible.

8. Flood insurance coverage is not expensive

Flood insurance premiums are determined by a large number of factors, such as the community’s rating system and types of coverage. Homes in moderate to low-risk areas may qualify for the preferred risk policy for $129 per year. This is a number you can easily afford compared to applying for a federal disaster assistance loan with an annual interest rate of 4% over 30 years.

What does a flood insurance policy cover?

Flood insurance covers the costs of:

  • Debris removal.
  • Professional fees (eg lawyers, architects, surveyors)
  • Repair or replacement of damaged furniture and property.
  • Alternative housing while you cannot live in your own home.
  • Dry, repair and restore your property, fixtures and fittings.

How much is flood insurance in the US?

If you work with the best insurance company near you, the average cost of flood insurance in the United States is $958 per year.

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The table below shows the cost of a flood insurance policy by state:

Flood insurance cost by state

condition Average annual cost Average monthly cost Percentage of households with flood insurance
Alabama $699 $58 4.03%
Alaska $913 $76 1.36%
Arizona $720 $60 1.58%
Arkansas $933 $78 1.81%
California $865 $72 2.87%
Colorado $944 $79 1.30%
Connecticut $1472 $123 3.75%
Delaware $752 $63 9.93%
District of Columbia $817 $68 1.72%
Florida $597 $50 32.95%
Georgia $694 $58 3.27%

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