Flood Insurance – What You Need to Know

Flooding is the most catastrophic natural hazard and causes, on average, $3 billion dollars in damage annually. In 1936 The Flood Control Act was the first national program aimed at flood damage. In 1965 Hurricane Betsy caused over $1 billion dollars in damage along the Gulf Coast of Florida to Louisiana and was the first storm of its kind to do so. Due to the catastrophe that Betsy had caused, the National Flood Insurance Act was passed three years later. For the first time, homeowners and businesses could purchase flood insurance through the National Flood Insurance Program.


During the last 50 years, these types of programs have grown exponentially, which resulted in the creation of the National Flood Insurance Act of 1968, which made flood insurance available, and the Flood Disaster Protection Act of 1973, which made protection of property located in Special Flood Hazard Areas mandatory

There are many questions that come to mind when thinking about flood insurance. In this article, we explore various common questions that come to mind when considering flood insurance.

How Do I Know If I Need Flood Insurance?

Flood insurance is required if the following conditions are met:

  • Your property is located in a Special Flood Hazard Area (SFHA) and
  • You have a federally backed mortgage or loan that is FDIC insured on your building in a SFHA and/or
  • You have received a federal grant for previous flood losses and you wish to qualify for future aid

However, it’s always a good idea to review your flood risk and consider acquiring flood insurance for your home.

What Does Flood Insurance Cover?

Flood insurance covers an array of issues that may arise when a flood occurs. The plans vary depending on what kind of coverage you chose to opt for, but in general, coverage includes:

  • flood debris cleanup
  • structural damage (walls, ceilings, floors, stairways, etc.)
  • household appliances/utilities damaged by floodwater
  • wall to wall carpeting, tile, and other flooring surfaces

The most common flood insurance is offered through the federally regulated program known as the National Flood Insurance Program (NFIP). It has two policies:

Coverage of your actual home up to $250,000, including areas such as (but not limited to):

  • Your Home & Foundation
  • HVAC, Electrical & Plumbing
  • Carpeting/Flooring
  • Kitchen Installed Appliances
  • Windows

Coverage of your personal property up to $100,000, including areas such as (but not limited to):

  • Furniture
  • Decor/Art up to $2,500
  • Portable Appliances
  • Washers & Dryers

You may choose to opt for one or the other or buy both for a full protection plan.

Common items that are not covered by flood insurance include:

  • Cash
  • Precious Metals
  • Landscape
  • Cars
  • Mold Flood Damage
  • Septic Systems
  • Hot Tubs/Swimming Pools

What Does Flood Insurance Cost?

Costs of insurance vary based on a variety of things but typically comes down to what the flood risk level in your area is.

The average cost of a flood insurance policy is $700 per year, but that can be misleading as it greatly depends on where you live. If you’re in a low-risk area and need minimal coverage levels, your cost will most likely be much less. The opposite is true if your property is a high-risk zone and has a higher value.

FEMA uses various kinds of zone designations to determine risk:

V zones are usually located near the ocean and are particularly vulnerable to storm surges. They are the highest risk, and premiums in this zone are the most expensive.

A zones are usually located near a river, lake or stream, the second highest risk zone. The average premium is around $500 annually.

B, C, X, and A99 zones are less prone to flooding.

The best way to determine your cost is to contact your local insurance provider and request a quote.

Why are flood insurance rates rising?

Faced with a $24 billion deficit in the National Flood Insurance Program, Congress passed the Biggert-Waters Act to help make the program more fiscally sound. Under the act, an estimated 268,000 Florida homeowners in older homes, whose rates are now subsidized by the federal flood insurance program, will face a gradual to steep increases in their premiums under a provision that took effect on Oct. 1.

Also affected are homeowners who bought older homes since the act took effect July 1, 2012, and who thought they would be able to continue the subsidy under the “grandfather” provision of the flood control act, and homeowners whose home in the flood-prone region is their second home.

What will happen to my rates if my rate is “grandfathered?”

Until now, the federal policy was to allow property owners who maintained payments on their flood insurance to receive the subsidized rate and avoid the rate shock of having their insurance match the true market rate.

Under the Biggert-Waters Act, property owners who have subsidized policies for non-primary residences and commercial property will see annual increases in their rates of 25 percent until the rate matches the full risk rate.

Property owners with subsidized rates who sell their home, allow their policy to lapse or purchase a policy for the first time, will no longer be eligible for subsidies starting this month and will be charged the full risk rate.

What is a “full risk flood insurance rate”?

A full risk rate is one in which the premium takes into account the full range of possible flood losses, including rare but catastrophic floods.

How does a property owner know if the rate is an accurate reflection of the flood risk?

Many factors influence the rate but the most important is the elevation of the structure in relation to the base flood elevation (or BFE.) A community’s Flood Insurance Rate Map (or FIRM) indicates the portion of that community that has a 1 percent or greater chance of flooding each year. That is considered the Special Flood Hazard Area, or high-risk zone. The higher the elevation of a structure above the base flood elevation, the lower the flood risk. This information is reflected on an Elevation Certificate, a form completed by a licensed engineer or surveyor.

How do you get an elevation certificate?

Every property in a flood zone already has had a surveyor certify the property’s elevation. The insurance agent then rates the property based on that elevation certificate. Elevation certificates may be part of a homeowner’s mortgage documents or be in their file with the insurance agent or lender.

Homeowners may also hire a surveyor to complete a new elevation certificate. The cost usually starts at about $200.

To learn more about flood insurance, you can visit FEMA’s website.

Flooding in Naples happens, but as long as you protect yourself with the proper insurance coverage, living in Naples can be wonderful. Find your new home today at roorda.com!