How Much Does Flood Insurance in Texas Cost?

Highlights

• Flood insurance coverage in Texas typically costs between $474 and $1,444, with an average cost of $661 per year.

• The exact cost of flood insurance in Texas depends on the home’s flood risk and zone, elevation, geographic location, building characteristics, coverage type and amount, as well as the deductible amount and the insurance provider.

• Flood insurance commonly includes coverage for the building and the homeowner’s personal property as well as loss of use coverage. Homeowners can also opt for loss avoidance (which pays for protective measures a homeowner takes to minimize damage from flooding) and debris removal coverage.

• A homeowner may need to purchase flood insurance if it’s required by their mortgage lender. In addition, it’s a good idea to purchase coverage for homes in high flood risk areas or those that are in close proximity to water.

From wide-open deserts to sandy Gulf Coast beaches, the state of Texas offers a range of climates and geographical features. Despite the warm temperatures, however, many Texas homes are at risk of flooding. Homeowners on the coast could face flooding due to tropical storms or hurricanes. Even inland homes could be at risk of flood damage from overflowing rivers or flash flooding from extreme weather.

Texas homeowners in floodplains can help protect their homes by purchasing flood insurance, but they may be concerned about how much flood insurance in Texas costs. The typical range for flood insurance rates in Texas is between $474 to $1,444 per year, with the average cost at about $661. The exact cost of flood insurance in Texas, however, will vary from one home to another. A variety of factors, from home elevation to foundation materials, could impact the price a homeowner might pay for flood insurance. This guide goes over how flood insurance costs are calculated, the types of coverage offered by the best flood insurance companies, and ways for Texas homeowners to find the right flood insurance coverage for their homes.

Factors in Calculating Flood Insurance in Texas Cost

Photo: istockphoto.com

The national average cost of flood insurance is $771 per year, while the average yearly cost in Texas is $661. Although Texas homeowners typically pay less than the national average, the individual cost of flood insurance depends on a wide range of factors. Flood insurance companies use data from the insured home to calculate insurance rates, such as the elevation, location, and even foundation type used on the home. Additionally, the type of coverage and deductible the homeowner chooses affects what they’ll pay for insurance.

Flood Risk and Zone

Although flooding can happen almost anywhere, certain geographic regions and features increase flooding risk for homeowners. The Federal Emergency Management Agency (FEMA) is in charge of managing natural disasters and developing risk assessments for future disasters. Part of FEMA’s responsibilities include monitoring and managing flood risk assessment throughout the country. FEMA uses geographical and historical flood data to create flood risk zones and risk maps. Insurance companies then use these maps and risk zones to determine if a home is at higher risk for flooding due to location or weather patterns. Homes in higher risk zones typically have higher flood insurance rates.

The Texas coast, for example, is particularly prone to flooding as a result of severe weather conditions caused by hurricanes and tropical storms from the Gulf of Mexico. However, the Gulf Coast isn’t the only flood risk zone in Texas. Known as Flash Flood Alley, a wide band of North and Central Texas regularly sees severe weather that can lead to flash flooding and extensive flood damage. It may cost more to insure homes in either of these areas than it would to insure homes in a low-risk zone.

Home Elevation

Homes that sit on higher ground tend to have lower risk of flooding than those sitting in low-lying areas. Texas homeowners who build or buy homes on hills or other elevated areas could get lower flood insurance rates than those who buy homes in lower elevation areas.

In addition, the home’s proximity to water could affect the price of flood insurance. A home that sits closer to a body of water, such as the Gulf Coast or a river, is generally at higher risk than a house that’s miles away from the nearest water source. The farther the home’s distance to water, the less the homeowner will usually pay for flood insurance.

For example, if a buyer is considering two different properties—one on the coast and one slightly inland and at a higher elevation—they’ll likely find that flood insurance costs much less for the latter property. The buyer will need to weigh their desire to live in a coastal home with views of the Gulf against the higher cost of insuring that property.

City or County

One thing homeowners may not know about flood insurance is that a home’s location plays a major role in determining flood insurance costs. Some cities and counties in Texas are at higher risk of flooding. According to the Texas Department of Insurance, almost every major city in Texas is in an area of high flood risk.

Homeowners may be able to get a better idea of the cost of a flood insurance policy in their city or county by contacting a flood insurance agent for quotes. Home shoppers might want to contact an agent even before they start looking for homes. Talking with an agency before finding a home could help home buyers narrow down their home search to locations with lower risks of flooding and generally lower flood insurance rates.

Building Characteristics

The way a home is built can affect the owner’s insurance rates. Generally, newer homes cost less to insure than older homes because newer homes are built with flood risks in mind. In flood-prone regions, the right building materials can help prevent water damage from standing flood waters or resist collapse from rushing water. For instance, an older home may be built with wooden supports in the foundation, which could be prone to rot. A newer home, however, may have a completely concrete foundation and include a basement drain system to help reduce the risk of standing water.

Texas homeowners with older homes may want to consider improving the home’s flood resistance to lower their flood insurance costs. Adding drainage systems, elevating the home, and updating construction materials for water resistance could help lower insurance costs.

Coverage Type and Amount

There are a few types of flood insurance coverage. A homeowner can pick and choose what coverage types make the most sense for their home. For example, building property coverage protects the physical structure of a home, while personal property coverage protects a homeowner’s belongings in the event of a flood. The more coverage a homeowner adds to their policy, the more they’ll typically pay for flood insurance. Likewise, a homeowner could lower their flood insurance costs by limiting the types of coverage their policy includes.

The amount of coverage a Texas homeowner chooses will also usually affect their flood insurance costs. Choosing a higher coverage limit generally increases the cost of insurance, while a lower coverage limit often reduces the cost of premiums. For instance, a homeowner can choose between the maximum building property coverage available through private insurers, which is $500,000, or a lower limit of $250,000. The higher building property coverage limit will give the homeowner a better chance of recouping costs if a flood destroys the home, but they will likely pay more for the coverage. On the other hand, the $250,000 worth of coverage could be cheaper, but the homeowner may have to pay out of pocket for repairs if a flood causes more damage than their policy will cover.

Deductible Amount

Just like coverage limits, homeowners can generally pick their deductible amount, usually from a set range of options. A flood insurance deductible works like a deductible for other types of insurance and is the amount of money the policyholder has to pay out of pocket before their insurance policy kicks in.

A higher deductible means the homeowner has to pay more out of pocket if they file a claim as a result of some type of loss. However, choosing a higher insurance deductible usually results in lower insurance premiums. On the other hand, a homeowner might choose a lower deductible. This could raise their insurance rates, but they wouldn’t have to pay as much out of pocket to repair damage after a covered flood event.

A homeowner in Texas, for example, may have a choice between a $500 deductible and a $2,000 deductible. The $500 deductible comes with higher insurance rates than the $2,000 deductible. However, if a flood damages their home, a homeowner would only have to pay $500 of their flood insurance claim. By choosing the higher $2,000 deductible, a homeowner could lower their rates, but they’d have to pay four times more out of pocket when making a claim.

National Flood Insurance Program vs. Private Insurance

Flood insurance in Texas is generally available through two avenues:

• The National Flood Insurance Program (NFIP), managed by FEMA, and

• Private insurance companies.

The NFIP is a government-run program that helps people living in floodplains and other flood-prone areas get coverage for their homes. The NFIP partners with select insurance carriers to offer flood coverage in Texas. Texas homeowners can choose a flood insurance policy through one of these carriers. FEMA and the NFIP then back the policy to help reduce the cost and risk for the insurance company to insure a home with flood risks. NFIP policies typically have a 30-day waiting period before they go into effect and are only available in certain areas with high flood risk.

Private flood insurance may also be available for Texas homeowners. Unlike NFIP policies, private flood insurance policies are not government backed. However, private flood coverage may offer homeowners more coverage options than an NFIP policy and could be less expensive. Some homeowners also use a private flood policy in addition to NFIP coverage as excess coverage. For example, a Texas homeowner with an NFIP policy that has $200,000 in coverage may choose to get a private policy in addition to their NFIP policy in order to increase their coverage.

Actual Cash Value vs. Replacement Cost Coverage

After a covered flooding event, insurance companies typically pay out claims using one of two types of coverage: actual cash value or replacement cost coverage.

Policies that pay claims using actual cash value use depreciation to determine the current market value of a homeowner’s dwelling or personal property. This often lowers the amount of money paid to homeowners in a claim. For instance, a homeowner with this type of coverage may submit a claim for damages to a large TV in their basement after it’s destroyed by a flood. The TV cost $1,000 brand new, but its depreciated value is only $500. Therefore, the policyholder would receive a payout of $500 (less the deductible) to replace the TV. In this case, they would either need to purchase a lower-quality model or pay out of pocket to get a new TV of similar size and quality.

A policy with replacement cost coverage, on the other hand, doesn’t use depreciation when paying out claims. Replacement cost coverage policies pay out the cost of rebuilding the structure or replacing items with comparable items at today’s prices. For the homeowner with the ruined TV, the insurance company would pay the homeowner the total cost to replace the TV with a comparable new one (less the deductible). Generally, replacement cost coverage is more expensive than actual cash value coverage but provides more complete coverage.

Photo: istockphoto.com

Types of Flood Insurance in Texas

While homeowners can do a lot to prepare for a flood, the extra security a flood insurance policy provides can give homeowners the assurance they’ll be able to rebuild after a flood. In Texas, homeowners can choose from a variety of flood coverage types and policy options. Depending on where a homeowner gets their policy, common coverage options include building property, personal property, loss of use, loss avoidance, and debris removal.

Building Property Coverage

As one of the most common types of flood coverage, building property coverage is offered by most Texas flood insurance companies. The building property coverage portion of a flood insurance policy helps protect a homeowner’s physical building in the event of damage due to flooding. This flood insurance covers things in a home such as electrical and plumbing systems, furnaces, major appliances like refrigerators and stoves, permanent cabinets, and foundations. Building property coverage generally doesn’t cover other structures on the property, such as swimming pools or septic systems.

Most homeowners who get flood insurance consider building property coverage to be an essential part of flood protection. However, building property coverage is typically one of the most expensive types of flood coverage due to the high coverage limits necessary to help rebuild a home after a flood. NFIP policies include up to $250,000 in building property coverage, and private flood insurance policies can have even higher limits. In most cases, a higher coverage limit means higher premiums.

Personal Property Coverage

Texas homeowners may also want to consider personal property coverage flood insurance in addition to building property coverage. Personal property coverage is the insurance that protects a homeowner’s belongings in the event of a flood. If a covered flood event damages the home’s interior, personal property coverage helps pay to repair or replace items such as furniture, clothing, or small kitchen appliances, to name just a few.

The NFIP coverage limit for personal property coverage is $100,000, and it comes with specific restrictions for high-value items such as fine art or collectibles. Texas residents who want higher coverage limits may want to consider a private policy, which often has much higher coverage limit options. However, choosing a policy with a higher personal property coverage limit will likely increase the overall cost of insurance.

Loss of Use Coverage

Many Texas homeowners can’t go back to living in their homes immediately after a flood. Whether the flood washes away part of the property or leaves just a few inches of water over the floor, homeowners may need to temporarily live elsewhere. Loss of use coverage helps pay for a homeowner’s added expenses to live outside of their home while cleaning up after a flood.

For instance, a homeowner may need to move out of their flooded home temporarily while repairs are completed. They may find a short-term rental or a hotel, but the cost to stay there is $1,000 more per month than they pay for their mortgage. Additionally, the homeowners find they are paying much more for food than they normally would because their kitchen is basic and they need to eat at restaurants more often. Their loss of use coverage could help cover these expenses that are above and beyond their typical living expenses.

Homeowners in Texas will want to note that NFIP flood policies don’t have an option for loss of use coverage. Texas residents who want a policy that includes loss of use coverage will likely have to buy a policy from a private flood insurance company.

Loss Avoidance Coverage

Using preventive tools and risk mitigation methods to lower the risk of flood damage is known as flood loss avoidance. Homeowners with a NFIP policy may qualify for loss avoidance coverage to help them lower the risk of flood damage in their homes.

Loss avoidance coverage from the NFIP includes up to $1,000 to purchase supplies and pay for labor to protect a home from an imminent flood threat. Coverage includes items such as sandbags and fill materials as well as plastic sheeting or lumber. Loss avoidance coverage also includes the cost of water pumps to help Texas residents move water away from their homes and prevent standing water. The coverage helps pay for professional labor costs if a homeowner hires a professional to install avoidance methods. Policyholders can also seek reimbursement for their own labor at the national minimum wage for the time it takes to put loss avoidance methods in place, such as stacking sandbags. In addition, loss avoidance coverage offers homeowners an additional $1,000 in coverage to move personal belongings or items to safe storage areas.

Debris Removal Coverage

Some flood insurance policies include coverage for debris removal. Debris removal coverage helps pay to get rid of debris after a flood, such as broken boards, ruined carpets, or flooded appliances. Homeowners looking at flood insurance may want to contact a flood insurance company to learn more about debris removal coverage options.

Not all policies will cover debris removal. Additionally, adding this coverage is likely to increase the cost of flood insurance premiums for Texas homeowners.

Do I Need Flood Insurance in Texas?

Although homeowners insurance covers certain types of water damage, this coverage generally excludes water damage from flooding. Many homeowners in Texas add flood insurance to help protect their homes, but Texas law doesn’t require flood insurance. That can leave Texans wondering whether they need flood insurance at all.

While flood insurance in Texas may not be required by law, there are three main reasons Texas residents may want to consider flood coverage:

• Their mortgage lender requires them to carry flood coverage;

• Their home is in a high flood risk zone; or

• Their home is close to a large body of water, such as a lake, the Gulf of Mexico, or a river.

Mortgage Lender Requirements

When a homeowner buys a house using a mortgage, the mortgage lender is making an investment in the property. The lender will look for ways to lower its risk, including requiring borrowers to purchase certain types of insurance to protect the home. For Texas homeowners, these requirements may include flood insurance. If a flood destroys a home and the homeowner doesn’t have flood insurance, they’ll have to cover repairs on their own—which may not be feasible. A home with flood damage loses significant value, and if the homeowner defaults on their mortgage, the lender may not be able to recoup its costs.

The state of Texas has many high-risk flood zones, including along the Gulf Coast and in low areas where flash floods are frequent. Many Texas mortgage lenders require homeowners to purchase both regular homeowners insurance and flood insurance to protect the home from flood damage.

Flood Risk

Even if a lender doesn’t require a flood insurance policy, it may still make sense for many Texas homeowners (and renters) to have one. Texas residents are encouraged to carefully research their home’s risk level for flooding. If the home is in an area at high risk of flooding, purchasing a flood insurance policy may be a good way to protect the home and the resident’s belongings.

It’s also usually a good idea for Texas residents to regularly check their home’s flood-risk levels. Flood risks are constantly changing due to weather patterns and changes to water flow. FEMA helps keep homeowners up to date on their flood risk using FEMA flood maps and their rating system Risk Rating 2.0. The Risk Rating 2.0 system uses a combination of weather and flood data as well as information about the home—such as foundation type and elevation—to determine the risk level of the home. Homeowners or renters with homes in the high-risk rating category may want to purchase a flood insurance policy.

Proximity to Water

The distance a home is to a body of water can affect the home’s chance of flooding. Homes near a body of water, such as a river or beachfront on the coast, are at higher risk of flooding than elevated homes that are several miles from any water sources. Texas homeowners who live near water sources, especially those living near the Gulf Coast, may benefit from getting flood insurance to protect their homes.

Photo: istockphoto.com

How to Save Money on Flood Insurance in Texas

The city, county, and even a home’s elevation can change how much a homeowner will pay for flood insurance in Texas. Although a Texas resident cannot change their home’s flood risk without moving to a different area, there are ways for homeowners and renters to save money on flood insurance.

• Choose a higher deductible: Raising a flood insurance policy’s deductible generally lowers the cost, but homeowners will have to pay more out of pocket before their insurance coverage kicks in after a flood.

• Get an elevation certificate: Elevation certificates detail the location of a building, its lowest point of elevation, its flood zone, and other characteristics that height FEMA uses when determining risk and could save the homeowner money on flood insurance.

• Ask for mitigation discounts: Texas homeowners can mitigate their flood damage risks—and potentially lower insurance costs—by installing flood drainage systems, elevating utilities, filling basements, and elevating their homes.

• Get multiple quotes: Shopping around for flood insurance can help Texas residents find the best coverage at the best price.

Questions to Ask About Flood Insurance in Texas

Many insurance shoppers find flood insurance a little confusing, so it’s important for Texas residents to ask questions when looking for coverage. Talking with an insurance agent or NFIP representative can give Texas homeowners a better idea of what is and isn’t covered by a policy. Additionally, asking questions while shopping for flood insurance can help the homeowner or renter compare policies to find the right fit for their homes. Common questions Texas residents might want to ask themselves and their insurance companies include the following.

• Does my lender or landlord require flood insurance?

• Do I live in a high-risk flood zone?

• How often does my area flood?

• How severe is flooding in my area?

• What types of coverage can I get?

• What types of flooding does the policy cover?

• What are the exclusions to the policy?

• How can I lower the risk of flood damage at my home?

• Are there any discounts available for flood insurance?

• How long is the waiting period before coverage kicks in?

• What are the deductible options?

• How do I file a claim?

FAQs

Texas homeowners and renters may be at higher risk of flooding than those who live in other states—especially those who live along the coast. Getting a better understanding of how flood insurance works and requesting quotes from multiple carriers can help Texas residents find the coverage they need to protect their homes in the event of a flood.

Q. What is the average cost of flood insurance in Texas?

The average annual cost of flood insurance in Texas is $661, with an average range of $474 to $1,444. There are several factors that affect the cost of flood insurance, including home elevation and location, so the exact cost may vary from one policyholder to another.

Q. What does Texas flood insurance cover?

Texas flood insurance generally covers the physical structure of a home and the policyholder’s personal property. Building structure coverage usually includes the foundation, walls, floors, and major appliances of a home, such as a furnace or water heater. Contents or personal property coverage helps cover the cost of replacing a policyholder’s belongings if a flood damages items such as furniture, clothing, or electronics.

Q. Is flood insurance going up in Texas?

Depending on the location of a home and the frequency of flooding, flood insurance prices could increase. Generally, flood insurance companies base their insurance prices on their assessment of risk for a property. If the risk of flooding is on the rise, overall insurance prices in the area may go up; for example, a river running at a higher capacity after the local government removes a dam. With more water flowing, houses along the river may be at higher risk of flooding and the homeowners’ insurance prices may go up.

Q. Is flood insurance worth it in Texas?

Texas residents who live in a high-risk flood zone may find flood insurance to be worth it—and their mortgage lenders may require it. However, even homes outside of high-risk zones can be prone to flooding after severe rains. Although there are no laws requiring flood insurance, the Texas Department of Insurance encourages almost everyone in Texas to purchase flood coverage.

Q. What is the max flood coverage in Texas?

The NFIP provides up to $250,000 of building property coverage and $100,000 of personal property coverage for residential properties in Texas. However, this may not be sufficient coverage to protect a home in Texas. Residents may qualify for higher coverage limits through a private flood insurance company.

Q. Can you shop around for flood insurance?

Yes—just like you can shop around to compare homeowners insurance costs, you can shop around for flood insurance to find the policy that best fits your needs and budget. Shopping around is generally the easiest way for homeowners and renters to find a policy that has enough coverage at an affordable price. Texas insurance shoppers can usually find the best deal by carefully comparing similar policies from multiple carriers, including choosing policies that have similar coverage limits and deductible options.

Q. How do you check if a property is in a flood zone in Texas?

Homeowners and renters in Texas can easily check their area’s flood risk using FEMA’s Risk Rating 2.0 state profiles. This resource gives residents access to several data sets, including a risk rating by ZIP code and county. Texas insurance shoppers can also see FEMA’s Texas state profile under the Risk Rating 2.0 method.

Q. Where does it flood the most in Texas?

Being the largest state in the lower 48, Texas covers a lot of area. Despite its size, much of Texas is prone to flooding. According to the Texas Department of Insurance, two of the most significant areas for flooding are in Flash Flood Alley (covering Central to North Texas) and the Gulf Coast.

Q. What is the flooding season in Texas?

Flooding in Texas usually happens in relation to the spring and summer storm season—April through September. Heavy rainfalls in the spring and early summer can cause flash flooding in many areas of Texas. For those living near the coast, hurricane season from midsummer into fall can lead to heavy rains and flooding.

Q. Should everyone in Houston have flood insurance?

Being near the Gulf Coast, Houston is at risk of severe weather from tropical storms and hurricanes. For this reason, flood insurance may be beneficial for many Houston residents. Homeowners with a mortgage in Houston may even be required to purchase flood insurance as a condition of their mortgage. It’s recommended that Houston residents research the flood risk at their homes to get a better idea of whether or not they may want to carry flood insurance.

Sources: Policygenius, ValuePenguin, Forbes