Should I cancel my flood insurance policy? Part 2: Facts and Data.

This is a follow-up on our last blog about the conversations we have with property owners wanting to cancel their flood insurance policy.  It’s a complex decision that affects the risk we accept and how we mitigate that risk.  If you like facts and data, here’s some information that might help make a decision that’s right for you.


Homeowner’s insurance does not cover losses from flood disasters.  This is the primary reason it’s a big deal.  You need a separate flood insurance policy to be protected from flood disasters.


There are over 5.1M active FEMA flood insurance policies in over 22,000 communities (source: National Flood Insurance Program).  That’s a lot of coverage against flood disasters, and there are private flood insurance policies out there that aren’t part of the 5.1M.  But we still have a lot of un-covered losses every year, so it is not enough.


Surprisingly, the number of single-family homes in the 100-year floodplain that have flood insurance may only be half of what it should be (source: RAND, 2006).  The reasons can be complicated like non-compliance with regulations, or properties with no mortgage that choose not to have flood insurance.  Regardless, it’s alarming to know that there could be millions of American homes in the path of a flood disaster that have no insurance against that disaster.


The average annual FEMA flood insurance premium is about $700 and the average claim payment is about $31,690 (source: National Flood Insurance Program).  Your quote will vary and premiums are going up, but on average, policy holders seem to be getting their money’s worth.  Sometimes that’s hard to see if you’ve been paying insurance for a long time and haven’t experienced a flood, and we hope you never experience a flood.


Over 523,000 FEMA flood insurance claims resulting in claim payments of over $12.1B have been made OUTSIDE of the FEMA 100-year flood zone (source: National Flood Insurance Program).  So even if you aren’t required to buy the insurance because you are not in the 100-year floodplain, there are a lot of losses happening outside of the required flood zones.  Mother Nature would seem to not pay attention to the flood maps.  If you are outside the 100-year flood zone, you can get an inexpensive Preferred Risk Policy from FEMA which is the same coverage but a reduced price.


You can’t get FEMA flood insurance in every community because about 6,360 communities either don’t participate in the program or they are suspended from it (source: National Flood Insurance Program).  There are some federal rules about adopting FEMA flood maps and having flood regulations in place for the community.  If that doesn’t happen, the flood insurance may not even be available to you.  Check with your local officials to make sure FEMA flood insurance is available.


You can get up to a 45% discount on your flood insurance premium (source: FEMA).  Your community has to participate in the FEMA Community Rating System first, and the amount of the discount depends on the level of floodplain management activities the community engages in.  There are only about 1,500 communities that do participate and you can find out if your community participates here.



There’s no right answer when deciding whether to cancel your flood insurance policy because it’s a complicated question and it depends on your circumstances.  You’ll want to gather all the information you can to make your decision, and remember, Mother Nature doesn’t care what the flood maps look like.  We’re here to help with flood certification no matter what you decide.  If you have questions or there’s something we can do to help, just drop us a line.



Stay safe.