What Factors Make My Flood Insurance More Expensive?

Flood insurance can feel confusing—especially when your premium comes in higher than expected. If you’ve ever wondered “Why is my flood insurance so expensive?” you’re not alone.

As a flood insurance company, we talk to homeowners every day who are surprised by their rates. The truth? Flood insurance pricing is based on very specific risk factors. Once you understand them, the numbers start to make a lot more sense.

Let’s break it down.

1. Your Flood Zone

The biggest factor in your flood insurance cost is your FEMA flood zone designation.

The Federal Emergency Management Agency (FEMA) divides areas into zones based on flood risk:

• High-Risk Zones (A, AE, VE) – Higher premiums

• Moderate-to-Low Risk Zones (X) – Lower premiums

If your property is located in a high-risk Special Flood Hazard Area (SFHA), insurers expect a greater likelihood of flooding—and price accordingly.

Homes in coastal or river-adjacent areas typically carry higher premiums due to increased storm surge and overflow risk.

2. Elevation of Your Home

Elevation plays a major role in determining your rate.

Insurance companies compare your home’s lowest floor elevation to the Base Flood Elevation (BFE):

• If your home sits below BFE, your premium increases.

• If your home sits at or above BFE, your rate decreases.

An elevation certificate can sometimes significantly reduce your flood insurance premium.

3. Replacement Cost of Your Home

The more expensive it is to rebuild your home, the more coverage you’ll need.

Flood insurance premiums are partly based on:

• Building replacement cost

• Square footage

• Construction type

• Foundation type

Larger homes and custom builds generally cost more to insure.

4. Coverage Amount & Deductible

Your policy choices matter.

• Higher coverage limits = higher premium

• Lower deductible = higher premium

If you're looking to reduce your flood insurance cost, adjusting your deductible can be a strategic option (though you’ll pay more out-of-pocket in a claim).

5. Foundation Type & Enclosures

The way your home is built affects how water impacts it.

• Slab foundations are generally lower risk.

• Basements increase risk (and cost).

• Enclosed areas below elevated homes can also increase premiums.

Floodwater that reaches finished lower levels dramatically increases potential damage.

6. Location & Proximity to Water

Distance matters.

Homes located near:

• Oceans

• Rivers

• Lakes

• Bayous

• Drainage systems

…are statistically more likely to flood. Even homes not directly on water but in low-lying terrain may see higher rates.

7. Flood Insurance Rating System Changes (Risk Rating 2.0)

Federal Emergency Management Agency recently introduced Risk Rating 2.0, which modernized how flood risk is calculated under the National Flood Insurance Program (NFIP).

Instead of relying primarily on flood zones, pricing now considers:

• Distance to flooding sources

• Type of flooding (river, coastal, rainfall)

• Property characteristics

• Historical loss data

This change has caused premiums to increase for some homeowners and decrease for others.

8. Prior Flood Claims

If a property has a history of flood claims, insurers see it as higher risk. Multiple past losses can significantly increase premiums.

9. Community Participation in Flood Programs

Communities that participate in FEMA’s Community Rating System (CRS) may qualify residents for discounted flood insurance rates.

If your town invests in flood mitigation (better drainage, levees, planning), you may benefit from lower premiums.

How to Lower Your Flood Insurance Premium

While you can’t change your flood zone overnight, you may be able to:

• Increase your deductible

• Elevate utilities (HVAC, electrical panels)

• Add flood vents

• Obtain or update an elevation certificate

• Review your coverage limits

• Shop private flood insurance options

Sometimes the biggest savings come from simply reviewing your policy with a flood insurance specialist.