If you are wondering what factors govern flood insurance premiums and rates, take a good look at this section. Following factors directly affect the amount of premium making it either sustainably high or low.
The first rule of real estate is location. Where the house is located is going to have an impact on how high the premium would be for flood insurance. Calculations are based on the degree of risk of flood. Weather pattern, history of the location, and building’s height from sea level will decide the amount. Houses near beach or located close to flood zones will carry higher insurance prices, and vice versa.
Material used for constructing a building or house is another critical aspect of this insurance type. Homes made from concrete are better capable of enduring harsh impact of floods compared to wooden houses.
Another factor that any insurance firm will take under consideration for deciding the premium amount is the degree of protection that the homeowner wants. If one desires for converge of worth 2 million dollars, the policy will accordingly become more expensive compared to desire for coverage of worth a million.
Companies consider the number of floods that occurred during the past twenty to fifty years. The damage that a flood could potentially cause to the house by the flood is also a big determinant.