While I don’t know how much you pay for flood insurance, I do know this it’s more than you want to be paying. It’s much higher than it used to be. It’s no secret that when it comes to any home insurance related product, there’s nowhere worse to be than Florida, and when it comes to flooding, South Florida.
We’ll often tell ourselves it’s the price to live in paradise, which is true, but it doesn’t make it any less expensive. And just as we’ve become accustomed to sunny day flooding during king tides, we’re potentially going to have to pay a king’s ransom for flood insurance. Ok, that’s a bit of a reach but you see what I was trying to do there. Anyway, based on a new study from First Street, the cost of flood insurance will soon be more.
The average cost of flood insurance from Miami through West Palm Beach is currently $1,069 a year. According to the study, we’re actually underpaying by a lot. The study estimated the fair value of flood insurance for the average South Florida home at about $1,500. The implication is that we’re underpaying for flood insurance by an average of $431 per home. Probably not what you were hoping to hear.
This comes in advance of FEMA’s new flood insurance guidelines which are due out later this year. You might imagine those new guidelines aren’t going to be good news for future flood insurance payments. What’s more is that the 40% underpayment is the overall average for South Floridians. If you’re in a flood zone in South Florida, the estimated underpayment is stunning.
According to the study, the average South Florida home in a flood zone is being undercharged for flood insurance by, get ready for it, 379%. The single worst locale for estimated underpayments for flood insurance is Miami Beach where First Street estimated flood insurance should be ten times what it is today.
Now, does this mean flood insurance is going to quickly reflect these estimates? No. This is an independent study, not something that’s commissioned by FEMA for the federal flood insurance program or the private insurance market. But what is does mean is that flood insurance prices, which are already higher in South Florida than anywhere else in the country, are set to head higher. Now is a good time to check out your flood insurance policy, your flood zone and see what this might mean to you so you can plan accordingly.