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Cost of Flood Insurance in Texas

The cost of flood insurance varies in Texas, depending on location, flood zone, building type, square footage, deductible, and coverage type. Standard commercial flood insurance, which provides a maximum coverage of $500,000 for a small business in Texas, costs between $804 and $1,200 yearly premium. However, businesses located in flood zones can pay over $10,000 annually for the same type of coverage. On the other hand, standard residential flood insurance ranges between $400 and over $1,000 yearly. Residential homes without Elevation Certificates or homes with Elevation Certificates that indicate that the lowest floor is 4 feet under the Base Flood Elevation (BFE) may cost over $2,000 (per year) for flood insurance.

How Much Should I Pay for Flood Insurance in Texas?

How much you should pay for flood insurance in Texas mainly depends on whether your building is residential or commercial, how much coverage you need (contents and/or building), and whether you are getting it from the NFIP or a private flood insurance company.

What Affects the Cost of Flood Insurance

The factors that affect the cost of flood insurance (annual flood insurance premium) are highlighted by the Federal Emergency Management Agency (FEMA). These factors include:

  • Flood risk - This is basically defined by whether you live in a flood zone. You can determine how much of a risk flooding is in your area by checking out the FEMA flood maps for your area. However, if you stay in a flood zone but your house is built on a hill or other elevation, the risk of flood damage may be lower, which also means your flood insurance premium may be less costly. This is because the elevation reduces the chances of your house getting flooded, which reduces the risk that an insurance company will have to pay out a claim.

  • Coverage type - If you purchase both building and contents coverage under your flood insurance policy, it will cost more than getting flood insurance without contents coverage. However, if you get only building coverage, the personal belongings and other contents in your home will become vulnerable to flood damage.

  • The deductible and amount of building and contents coverage - Generally, your premium will be higher than the average price if you purchase more building and contents coverage. Also, the higher your deductible, the lower your premium will be, but with a higher deductible, you will have to pay a higher amount out of pocket if you file a claim for flood damage.

  • The location of your building- The location of your building may put you at risk of flood, which may increase the amount of premium you pay. For instance, if your house is located close to a beach, it is at a higher risk of flood.

  • The design and age of your structure - Older houses do not have contemporary features that can reduce the risk of flood. Most of such structures were not built with construction materials and techniques that make houses less vulnerable to damage caused by flooding, like floor openings for water to drain out faster. Flood insurance for houses with such features is likely to be discounted because of the features that mitigate flood damage.

FEMA's new rating methodology, Risk Rating 2.0: Equity in Action, equips FEMA with the ability and tools to address rating disparities by integrating more flood risk variables. Some of these risk variables are flood frequency, multiple flood types, e.g., storm surge, heavy rainfall, river overflow, coastal erosion, and distance to a water source. In addition, the risk variables include property characteristics such as the building’s elevation and rebuilding costs.

Can you Lower the Cost of Flood Insurance in Texas

Yes, there are some actions you can take to lower the cost of flood insurance; some of which include:

  • Get an Elevation Certificate - If you live in a flood zone, getting an Elevation Certificate (EC) may provide you with relevant information to help inform mitigation actions that lower flood risk and ensure compliance with community floodplain management ordinances.

  • Mitigating your flood risk - You can minimize your flood risks through any of the NFIP recommended flood mitigation options:

    • Elevate utilities like your heating and cooling systems, electrical panels, water heaters, and appliances to lower their risk of getting damaged in a flood.

    • Meet the requirements highlighted in the ICC Policyholder’s Processing Checklist, which are:

      • A minimum of one square inch of opening for each square foot of enclosed area

      • A minimum of two flood openings on at least two exterior walls

      • The base of the flood opening must not be higher than 12 inches above the exterior grade

      • To receive cost savings, flood openings must meet all the criteria listed above

Note that garage doors, exterior doors, and windows do not count as flood openings unless they have flood openings installed within them.

  • Fill in your basements. Suppose you reside in a flood zone where the community has adopted basement standards. In that case, you will bear a 15 to 20% increase in your flood insurance premium if you have a basement that is not eliminated.

  • Elevate your building. By elevating your building above the Base Flood Elevation with as little as one foot above the BFE level, you can get up to a 30% reduction in annual premiums.

  • Get a Letter of Map Amendment (LOMA) - This is an official document from FEMA that amends the flood zone of your building. A LOMA can change your high-risk zone to a low-risk zone and give you the official federal documentation to prove it. However, note that you must provide specific mapping and survey information for your property before FEMA reviews your LOMA request.

Discuss with your agent to find out other personalized ways to lower the cost of your flood insurance without sacrificing your current coverage.

How to Save on Flood Insurance in Texas?

You can save on flood insurance by various means; one of which is by negotiating the cost of your flood insurance after mitigating the flood risks of your home or apartment. You can mitigate your flood risks by elevating your home above the Base Flood Elevation, installing flood openings, filling your basements, and elevating your valuables above the maximum flood level in your area.

You can also get discounts on your flood insurance if your community is enrolled in the Community Rating System (CRS). However, this is only available to communities enrolled in the CRS. FEMA calculates this discount based on your community’s efforts to reduce the risk of flooding. Speak to your insurance agent to know if your community qualifies for this. If your community does not qualify, you can also encourage your community officials to participate in the CRS.

If you do not stay in areas with high flood risk, choosing a higher deductible may be an option for you, as doing this will lower your premium. However, it also means that you will need to cover most of the cost to rebuild or repair out of pocket or from your savings if flooding occurs. A better option may be to choose different deductibles for building and contents coverage. For instance, if the valuables in your house are elevated, you may choose a higher deductible for contents coverage. Note that it is necessary to properly weigh your options before making this decision because flood damage can cause very expensive repairs. If you increase the deductible on your flood insurance policy to the $10,000 maximum, you could save up on your annual premium by up to 40%. Although, using the maximum deductible might not be permissible for everyone.

Generally, the best way to save on flood insurance in Texas is by talking to your insurance agent. Your insurance agent can help you:

  • examine your flood risk, and coverage needs to ensure you have adequate coverage, and you do not pay for what you don’t need

  • compare different quotes to find the right coverage that suits your needs at the best price possible.

  • source for discounts

  • guide you on ways you can mitigate your flood risk

What is the Average Cost of Flood Insurance in Texas?

The average cost of flood insurance in Texas is around $620 a year, but you can usually get a federal flood policy for less than $500 a year if you live outside a high-risk flood zone. Generally, the average cost of flood insurance for renters is lesser than that of homeowners. On the other hand, the average cost of commercial flood insurance for small businesses is between $800 and $1200 annually. The average cost of commercial flood insurance for larger businesses in Texas runs into thousands of dollars, depending on the risk factor in the business’ location.

How Much Flood Insurance Coverage Do I Need?

Texas is a flood-prone state, with most cities and towns at risk for floods. So, no matter which city or town you live in Texas, you may need to obtain flood insurance to cover your building and the contents therein because flooding can occur at any time. In Texas, as little as one inch of water can cause $25,000 of damage to your home or commercial building. However, consider that Texas can experience as much as 10 inches of flood or even more, thereby causing more expensive damages. Therefore, to avoid paying out of pocket for expensive repairs, you will need to get the maximum building and contents coverage if you stay in a flood risk area. On the other hand, if your commercial or residential building is not in a high-risk area or is well elevated above ground level, you may only get building coverage. No matter how much extra coverage you may want, you are limited to a maximum amount of coverage:

  • Residential Flood Insurance can be purchased with coverage up to $250,000

  • Commercial Flood Insurance can insure up to $500,000

How Much is Flood Insurance Premium in Texas?

The amount you are charged for flood insurance premium is primarily determined by:

  • your location,

  • insurable value of the property (since you cannot oversure, even if the maximum limits allow it),

  • how much coverage you need (up to the possible maximum limits), and

  • whether you live in an area with high flood risk.

For instance, areas like Houston, Fort Worth, and Austin in Texas have higher chances of being flooded than Plano. Hence, the insurance costs vary. In Houston, average flood insurance costs around $500-600, while in Fort Worth and Austin it averages $850 and $630, respectively. On the other hand, average flood insurance in Plano is under $500.