If the home you are purchasing is in a flood zone or near a water source, chances are that you'll need to get flood insurance. Most homeowners don't need this kind of insurance unless it is absolutely necessary, but if you do need to have it, the way that premiums are determined can feel confusing to you. By knowing what factors determine the flood insurance premium that you'll pay, you can get a better idea of what to expect before you purchase a policy.
The Flood Zone
There are actually different ratings of flood zones as defined by FEMA, which is done for land located near bodies of water. It helps identify if an area is vulnerable to flooding based on a zone letter system, and you can look up your home on this map all on your own.
Flood insurance will be mandatory if you live in a Special Flood Hazard Area (SFHA) since they have a high risk of flooding. This is defined by having a 1% chance of flooding during the year. Another set of zones is referred to as a moderate hazard area, which means there is a .2% chance of flooding. Areas that are considered to have minimal risk are located at a higher elevation than moderate hazard areas.
The Community Flood Prevention Plan
Your county, town, or city will have a plan for flood prevention, and it can affect your premiums. If your town is very proactive against flooding by building dams or levees, it could result in your home being at a lower risk and having a lower premium. Another community may not take any action at all. If you are not sure what the city does in terms of flood prevention, contact the city hall office and ask.
The Home's Vulnerability
Aspects of a home can make it less vulnerable than others. This includes not having a basement or a home that is built on stilts, and having a flood control system installed. The elevation of the home is also crucial, with a home up on a hill having a lower risk for flooding. All these factors will impact the insurance premium.
The one factor you do have control over is the deductible. Like most insurance policies, a higher deductible results in a lower premium that needs to be paid.
To get an accurate quote on flood insurance, speak with an insurance broker in your area from a company like Heritage Insurance Agency.