12 Jul CALIFORNIA FLOOD INSURANCE: WHAT DOES IT COST? DO YOU NEED IT?
The state of California doesn’t require flood insurance but a lot of home buyers still need to have it to satisfy their mortgage requirements. Flood insurance is also an important consideration for anyone living in or near a floodplain, even if the risk level is low.
Typical home and rental insurance policies do not cover flood losses but coverage can be obtained through the National Flood Insurance Program (NFIP) or a private company. Flood coverage in California costs about $800 per year through NFIP but private sources may be able to lower costs and raise coverage limits.
Some mortgage companies will require an NFIP policy but California homeowners have the option to buy coverage from NFIP or through a private agency. NFIP insurance can usually be obtained from the same source as your regular homeowner’s policy, which makes it easy.
NFIP flood coverage options are identical in all states and prices are based on individual home values and flood risks. A maximum of $250,000 for the dwelling, itself, and $100,000 for personal property is allowed. Non-residential buildings can be insured for a maximum of $500,000. Basements and temporary relocation costs are not covered, nor are vehicles, which need comprehensive car insurance to be protected from flood waters.
A flood policy takes care of several risk factors faced by California homeowners. Some of these are:
- Overflowing tidal or inland waters, like rivers flooding during a severe thunderstorm.
- Mud flowing over usually dry land.
- Levees failing.
Earth movement, however, will typically be excluded, even if caused by flooding. An NFIP flood insurance policy will not cover landslides or sinkholes caused by flash flooding. California homeowners will also need insurance coverage for other regional risks like earthquakes.
Flood coverage is not required by law by the state of California but is often demanded by mortgage firms on properties in probable high-risk areas. “Special flood hazard areas” are determined over the course of time, so check the Federal Emergency Management Agency’s Flood Maps for current high-risk status zones.
Maps of California’s floodplains will let you see if flood insurance is required for you to get a federally-financed loan. This is normally found in zones starting with the letters A or V. Flood zones A, V, B, X, and C will generally be required to carry flood insurance for any loan type.
It is still an excellent idea to think about flood insurance if your lender does not require it or if your home is paid off. Your homeowner’s insurance will not cover damage if a flood takes place and flooding normally a specified exclusion. Government help is unlikely unless an official federal disaster area is announced. Flooding is the number 1 natural disaster in the United States. People outside of high-risk flood zones file more than 20 percent of all NFIP claims and receive one-third of federal disaster assistance for flooding.
Every county in California has been a flood disaster area at least one time and most of the state lives with some level of flood risk. Strong storms in Northern and Central California have made rivers flood in the recent past and wildfires followed by flooding have done much damage in Southern California. This flooding has done severe house and property damage to California homeowners. Although no flood policy covers everything, you could easily incur six-figure or greater losses if you have no insurance at all.
NFIP insurance will vary in price depending on what zone your house was constructed in, when it was constructed, and how it is made. A house with a basement, for example, will cost more to insure than one built on a slab. The deductibles you pick will also be a factor in the price of your premiums. NFIP flood insurance policies have deductibles that range from $1000 to $10,000 in most cases. Rates for your home will not vary no matter the company you pick, though, as the entire program is covered by the NFIP.
Flood insurance in California averages $793 per year through the NFIP but average premiums can vary by as much as 190% by region.
Compare rates from an NFIP policy against what is offered by a private insurer to find the cheapest flood insurance in California. This isn’t possible in all cases, as certain lenders want NFIP flood insurance in place, but a private insurance company may give you lower rates and higher limits of coverage.