More than 3 million homeowners who live in coastal areas will see premiums for federal flood insurance rise this year as the Federal Emergency Management Agency adjusts insurance rates to reflect the risks of climate change.
Damage from water that rises from the bottom up—such as flooding from a heavy rainfall or hurricane—isn’t covered by homeowners insurance. But your policy will likely cover damage if your water heater leaks or a water pipe inside your house bursts.
The National Flood Insurance Program is the primary provider of flood coverage, although some private insurers also provide flood insurance. The NFIP provides about $1.3 trillion in coverage for more than 5 million policyholders in 22,500 communities across the nation. The cost of an NFIP policy varies, depending on risk, but averages about $700 a year. A policy from a private insurer averages $1,050 a year, according to Policygenius, an insurance marketplace.
NFIP recently released new flood insurance rating procedures that are designed to provide a better measure of the risk of flooding in particular areas. The new methodology, which went into effect in October, will lower premiums for about one-fourth of existing policyholders, while more than 3.8 million will see rates increase.
For most of those homeowners, the increase will be $10 or less per month, according to an analysis by ValuePenguin, a consumer website. About 4% of flood insurance policyholders will pay more than $20 extra a month. Because of the geographic factors that influence the cost of flood insurance, some states are more likely to see higher increases. More than 10,000 policies in each of Florida, Texas, Louisiana, New Jersey and New York will face the highest price increases, according to ValuePenguin.
How to buy coverage. To purchase flood insurance, call your insurance company or insurance agent. You can also find a provider at www.floodsmart.gov/flood-insurance-provider or by calling the NFIP at 877-336-2627.
The program provides up to $250,000 of dwelling coverage and up to $100,000 of contents coverage. The policy has two separate deductibles (one for dwelling, one for contents) that you must pay before coverage kicks in. Deductibles start at $1,000 but can go as high as $10,000 for single-family homes.
Homeowners who want more coverage may be able to buy private insurance, which typically has higher coverage limits. Premiums for a private policy will vary depending on where you live; in some cases, they may be lower than premiums for an NFIP policy.
As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
Three Mistakes to Avoid in Retirement Tax Planning
Having a good tax plan can help keep you on top of what you need to do to maximize your savings for your golden years.
By Tony Drake, CFP®, Investment Advisor Representative Published
Stock Market Today: S&P 500, Nasdaq Finish the Week at New Highs
Dell was one of the best-performing stocks Friday after the PC maker hiked its dividend by 20%.
By Karee Venema Published
403(b) Contribution Limits for 2024
retirement plans Teachers and nonprofit workers can contribute more to a 403(b) retirement plan in 2024 than they could in 2023.
By Jackie Stewart Published
Roth IRA Contribution Limits for 2024
Roth IRAs Roth IRA contribution limits have gone up for 2024. Here's what you need to know.
By Jackie Stewart Published
Four Tips for Renting Out Your Home on Airbnb
real estate Here's what you should know before listing your home on Airbnb.
By Miriam Cross Published
Five Ways to a Cheap Last-Minute Vacation
Travel Procrastinator? No matter. You can pull off a fun and memorable getaway on a moment's notice — without breaking the bank.
By Vaishali Varu Last updated
How Much Life Insurance Do You Need?
insurance Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life-insurance needs.
By Kimberly Lankford Published
When Is Amazon Prime Day?
Amazon Prime In 2023 Amazon had two Prime Day events — one in July and another, called Big Deal Days, in October. We expect 2024 to follow the same schedule.
By Bob Niedt Last updated
How to Shop for Life Insurance in 3 Easy Steps
insurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
By Kaitlin Pitsker Published
5 Ways to Shop for a Low Mortgage Rate
Becoming a Homeowner Rates are high this year, but you can still find an affordable loan.
By Daniel Bortz Published