Premium Costs

The NFIP uses the property address to assess flood risk by determining:

• A building’s distance to flooding sources, including the distance to the coast, ocean, rivers and Great Lakes.

• The elevation of the ground where the building is located compared with the surrounding land and nearby sources of flooding.

• Other characteristics such as the community where the building is located and any discount your building may receive through the Community Rating System (CRS).

Understanding the physical characteristics of your building helps determine its flood risk and how that risk affects your premium. Important variables include:

• Building Occupancy: The type and use of the building being insured sets available coverage limits and determines what is covered as indicated in the policy form.

• Foundation Type: The building’s foundation type provides important insight of its flood risk. For instance, risk varies based on whether a building’s foundation is slab on grade or a basement.

• First Floor Height: Buildings whose first floor is higher off the ground generally have lower flood risk.

• Number of Floors: Buildings with more floors spread risk across more levels.

• Unit Location: Individual units on higher floors have lower flood risk than units on lower floors.

• Construction Type: Masonry walls perform better in different flooding events than wood frame walls.

• Flood Openings: Flood openings can lower an elevated building’s flood risk as they allow floodwaters to flow through a building’s enclosure or crawlspace.

• Machinery & Equipment: Elevating machinery & equipment (including appliances) above the first floor lowers the risk of damage to these items.

The building’s replacement cost value, the amount of coverage purchased and the deductible choices influence the insurance premium.

• Building Replacement Cost Value: Buildings of higher value tend to have increased repair costs and larger claim payments which affect the flood insurance premium.

• Building and Contents Coverage: Policies with higher coverage limits have higher potential loss costs, which lead to higher premiums. Building coverage and contents coverage amounts are selected separately.

• Building and Contents Deductibles: Choosing a higher deductible means you will need to cover more out of pocket to rebuild after a flood. In return, your overall flood insurance premium may be lower.