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Why Is Flood Insurance So Expensive?

Why Is Flood Insurance So Expensive?

Whether it is your first time purchasing home or business flood insurance, or your renewal just came in the mail, you’re sure to have sticker shock. How can one policy covering one peril be so expensive? There are a few reasons why, and there are some things you can do about it. Location, Location, Location If you own property in a flood-prone area, your rates will be higher than in areas not prone to flooding. This can mean you are located near a water source such as a lake or river, or it could mean that you live in an area susceptible to run off or dam failure. Your flood zone is the largest determining factor in your premium. The Federal Emergency Management Agency (FEMA) defines flood zones as Special Hazard Flood Area (SFHA – zones starting with A or V), moderate hazard flood area (zones starting with B and X zones that appear shaded on the FEMA map), and minimal flood hazard areas (zone C or unshaded zone X). What can you do? Short of moving, you can check your flood zone to be sure what is on your policy is correct. FEMA is constantly revising maps in all areas. You can check your flood zone in the FEMA Flood Map Service Center. Bear in mind that the flood map link above won’t be enough to change your policy – you will need either a Letter of Map Revision (LOMR) from FEMA or have your elevation certificate updated by a licensed surveyor. The rate change most likely won’t be retroactive, but it would affect your upcoming flood policy...