Flood insurance pricing
Homeland Security states 90% of natural disasters in the U.S. involve flooding. But despite how common it is, coverage is not standard in most homeowners insurance policies.
Most residential flood insurance policies are sold through the NFIP, according to Forbes Advisor. Pricing for NFIP policies is set by the Federal Emergency Management Agency (FEMA), and as of April 2023 all policies were subject to an updated pricing formula. This will result in higher premiums for policyholders in high-risk areas.
Some Florida residents are set to experience dramatic price increases. According to the Miami Herald, citing FEMA estimates, premiums in one Palm Beach County zip code may increase by an average of 342%, while another zip code in South Florida could see premiums averaging north of $7,000 annually.
Not every homeowner, though, will see a premium increase, and FEMA actually estimates about 20% of Florida policyholders will see prices decrease. In addition, premiums wouldn't immediately skyrocket — hikes are capped at 18% a year until they reach the new price.
As of 2023, flood insurance in Florida from the NFIP cost on average $853 per year, according to ValuePenguin. This figure may seem more reasonable than the ones mentioned above, however, for low-income residents in areas where prices are going up, or where they need to make home upgrades for compliance reasons, the added costs can be a challenge. Especially considering the rising cost of home insurance in the state.
Don't miss
- Commercial real estate has beaten the stock market for 25 years — but only the super rich could buy in. Here's how even ordinary investors can become the landlord of Walmart, Whole Foods or Kroger
- Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you paying as little as $29/month
- These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how
How homeowners can mitigate flood risks
Preparation is key for mitigating flood risks. Sandbags and flood barriers can help redirect water from your home. During extreme weather events, some local authorities distribute sandbags at little or no cost.
Elevating appliances, such as washers and dryers, on cinder blocks or using flood pans can potentially protect them from flood waters. Placing smaller electronics and important paperwork in plastic bins can prevent them from being soaked. The U.S. government offers resources on how to build a basic disaster supply kit, which can help residents survive after a flood.
Floridians like Roth can also access community resources. For example, FloridaDisaster.org offers information about individual assistance for households recovering from natural disasters, including mental health support. FEMA also allows you to apply for individual assistance online. The Red Cross often works with communities following an emergency by offering resources as well.
Also, keep an eye out for announcements from municipal government officials, such as your mayor, on social media. They will often point residents in the right direction and keep you informed in real time during natural disasters.
What to read next
- Cost-of-living in America is still out of control — use these 3 'real assets' to protect your wealth today), no matter what the US Fed does or says
- Jeff Bezos and Oprah Winfrey invest in this asset to keep their wealth safe — you may want to do the same in 2024
- Stop crushing your retirement dreams with wealth-killing costs and headaches — here are 10 'must-haves' when choosing a trading platform (and 1 option that has them all)