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Flood Zone Insurance: How Location Affects Your Rates

Flood zones play a big role in deciding your flood insurance cost. Here's how to learn your zone and estimate your rates

Flood zone sign

Homeowners insurance policies do not cover floods, but standalone flood insurance policies are available and often required by the government or mortgage lenders. The government backs most flood insurance policies, although they are administered and managed by private companies. The National Flood Insurance Program (NFIP), part of the Federal Emergency Management Agency (FEMA), uses a handful of factors to assess risk, including your location. In order to know what you'll pay, you first need to know how FEMA categorizes your flood zone.

What flood zone are you in?

FEMA provides an online tool to find out your flood zone. Putting your address into the search bar provides an interactive view of the flood map for your area, which is called the Flood Insurance Rate Map (FIRM). However, the different flood zones are not easy to understand.

FEMA defines a Special Flood Hazard Area (SFHA) as a zone that has a 1% or greater annual chance of flood, also referred to as a 100-year floodplain. A 1% annual chance of flooding sounds small, but that small number is misleading. Over a 30-year mortgage in a 100-year floodplain, there is a 26% chance that the area will flood at least once.

Special Flood Hazard Areas include zones that begin with the letter A or V. "A" zones are at risk of flooding due to streams, rivers or ponds, while V zones are at risk of coastal flooding. The government mandates flood insurance in SFHAs, meaning you are required to have coverage.

Moderate- to low-risk areas are designated as B, X or C zones, and undetermined risk areas are designated D zones. Although the government doesn't require flood insurance in these zones because they aren't SFHAs, your mortgage lender might. Policies for these zones are available through NFIP and can be relatively inexpensive.  

Below is a table that summarizes what flood zones require insurance and their respective risks.

Zone Flood Risk Description Insurance

Required?  

A*, AE & A1-A30 >1% annual chance of flood, 26% chance over 30-year mortgage Undefined by FEMA Required
A99* >1% annual chance of flood, 26% chance over 30-year mortgage Flood protection system existing or in construction Required
AH & AO >1% annual chance of flood, 26% chance over 30-year mortgage Flood risk due to ponds, rivers or streams Required
AR >1% annual chance of flood, 26% chance over 30-year mortgage Properties with temporarily increased flood risk Required
V*, VE & V1-V30 >1% annual chance of flood, 26% chance over 30-year mortgage Coastal properties Required
B & X (shaded) .2% – 1% annual chance of flood Moderate-risk properties Not required
C & X (unshaded) <.2% annual chance of flood Minimal-risk properties Not required
D Undetermined Properties with undetermined flood risk Not required
*zone where no Base Flood Elevation (BFE) analysis has been performed

Determining which type of zone you are in is the easy part – the hard part is understanding what options are available to you and estimating the cost.

Flood insurance rates

Annual flood insurance rates through the NFIP vary based on your flood zone and the structure of your house. While coverage for low-risk properties can be as little as $100 a year, high-risk coastal properties can cost upwards of $10,000 a year to insure. However, if your building's most recent major renovation occurred before December 31st, 1974, you could be eligible for subsidies. This is because the initial Flood Insurance Rate Map — the zoning FEMA uses to help decide premiums — went into effect at the end of 1974.

Deductibles for NFIP policies start at $1,000 for building coverage, and $1,000 for contents. However, these minimum deductibles only apply if you have less than $100,000 of building coverage. Raising your deductible will lower your premium significantly. For example, choosing the maximum building deductible of $10,000 and maximum contents deductible of $10,000 reduces your annual premium by 40%.

High-risk areas: zones A, AE, A1-A30, V, VE & V1-V30

Because NFIP premiums are standardized, their rate tables are available online through FEMA, but they are by no means simple. The rate tables are based on rate per $100 of coverage. For example, if your rate is 1.0 per $100 and you want $5,000 of coverage, your premium will be $50.

anual premium = rate x coverage/100  

NFIP offers policies up to $250,000 of building and $100,000 of contents coverage. If you're in an SFHA, the minimum required coverage is $60,000 of building and $25,000 of contents coverage.

Coverage Minimum Additional Maximum
Building $60,000 $190,000 $250,000
Contents $25,000 $75,000 $100,000

All coverage over the minimum uses a different rate, so rate tables will show two numbers in the format minimum rate/additional rate. Below is a sample rate table for a single-family house built before 1974 (pre-FIRM) without a basement and in an A zone.

Zone Building cost per $100 of coverage Contents cost per $100 of coverage
A, AE, A1-A30, AO, AH, & D 1.12/1.03 1.41/1.84

Then the annual premium for maximum coverage would be calculated as follows:

Anual premium for maximum coverage formula  

Phew, we know that's a mouthful. Here are some sample calculations for maximum and minimum coverage.

Home type Building rate Contents rate Annual premium – maximum coverage Annual premium – minimum coverage
Pre-FIRM without basement in an A zone 1.12/1.03 1.41/1.84 $4,361.5 $1,024.50
Pre-FIRM without basement in a V zone 1.46/2.57 1.81/4.39 $9,504.00 $1,328.50
Post-FIRM without basement in an A zone, BFE +1 .92/.16 .51/.12 $1,073.50 $679.50
Post-FIRM without basement in an A zone, BFE 0 2.13/.25 .99/.12 $2,090.50 $1,525.50
Post-FIRM without basement in an A zone, BFE -1 5.18/.33 2.27/.12 $4,392.50 $3,675.50

Low-risk areas: zones B, C & X

For the maximum allowed coverage through the NFIP, the annual premium is $415 for homes with basements and $370 for homes without basements. Ballparking the annual premium is much easier for low-risk areas in B, C or X zones because the NFIP offers Preferred Risk Policies for qualifying homes, which carry less variation.

Homes in low-risk zones are nonetheless susceptible to floods, especially as extreme weather events become more frequent and severe. In the unlikely event that your home in a low-risk area floods, you'll be happy you had flood insurance. For as little as $108 annually, you can get $20,000 of building and $8,000 of contents coverage.

New legislation and options for flood insurance

The flood insurance industry is changing fast. A new law that went into effect on July 1st, 2019 requires mortgage lenders to accept private flood insurance policies. This has led to the emergence of private flood insurance providers in the past few years. Previously, lenders could require you to get flood coverage through the NFIP.

FEMA is also redrawing much of its flood map, using more sophisticated mapping techniques. This could raise your rates if you live in a high-risk area or lower them if you live in a low-risk area.

Although the changing rates and new providers make flood insurance as confusing as ever, the good news is that there are also more options than ever. That means you have the opportunity to shop around to find the cost and coverage that are right for you.

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