Flood Insurance Premiums
Rainy season is here, and parts of Florida know it all too well as some areas experienced heavy rainfall in the past 24 hours – with more on the way, almost daily. And, that reminds me that my flood insurance premium is due.
Renewing flood insurance coverage should be a no-brainer for those living anywhere near a body of water.
For me, it is a full-brainer, as each year I reconsider my decision – because I can. I have a so-called Preferred Risk Policy (PRP), meaning my property is at low risk for flood damage so the mortgage company doesn’t require flood insurance. But because I also know all too well that 20 percent of flood insurance claims come from low- to moderate-risk flood zones, I will renew. A recent trip to assess Houston’s flood damage reinforces this decision.
Most standard homeowners insurance policies do not cover flood damage; a separate flood insurance policy is required. There’s considerable confusion over flood insurance with all the changes in the flood insurance program. And, the cost is going up; so is the deductible amount. Since 2010, the cost of a PRP has gone up about 21 percent, and the deductible was increased 25 percent this year – from $1,000 to $1,250 for each type of coverage, one deductible for the building and one for contents inside it. The coverage amount remains the same, at $250,000 for the building and $100,000 for contents.
Preferred risk policies all cost the same: $405 annually, plus the $25 fee tacked on this year for primary homes. That fee is a surcharge, a sort of Plan B approach to compensate for the revenue that won’t be coming in because flood reforms were slowed down. Flood insurance at $430 a year may seem like a high price to pay to some people. Yet, here’s another way to look at it: It’s a small price to pay for the $350,000 in flood protection – and rain is in the forecast – again.