FLOOD INSURANCE MAY COST YOU MORE

More than 3 million homeowners who live in coastal areas will see premiums for federal flood insurance rise this year as the Federal Emergency Management Agency adjusts insurance rates to reflect the risks of climate change.

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Damage from water that rises from the bottom up—such as flooding from a heavy rainfall or hurricane—isn’t covered by homeowners insurance. But your policy will likely cover damage if your water heater leaks or a water pipe inside your house bursts.

The National Flood Insurance Program is the primary provider of flood coverage, although some private insurers also provide flood insurance. The NFIP provides about $1.3 trillion in coverage for more than 5 million policyholders in 22,500 communities across the nation. The cost of an NFIP policy varies, depending on risk, but averages about $700 a year. A policy from a private insurer averages $1,050 a year, according to Policygenius, an insurance marketplace.

NFIP recently released new flood insurance rating procedures that are designed to provide a better measure of the risk of flooding in particular areas. The new methodology, which went into effect in October, will lower premiums for about one-fourth of existing policyholders, while more than 3.8 million will see rates increase.