Bargain Insurance

Home Insurance

Bargain Insurance

Despite Katrina, premiums for flood coverage are still reasonable.

The federal government paid out about $23 billion in flood-insurance claims after Hurricane Katrina, and this year it was midwesterners who found themselves underwater. So you'd think that premiums for federal flood insurance would be going through the roof.

But flood insurance continues to be one of the best buys around. In fact, the price has not risen at all for residents of low-risk areas. If your home doesn't have a basement, you'll pay $317 per year for the maximum coverage-$250,000 for your dwelling and $100,000 for your possessions. If you have a basement, the price is $352.

In many higher-risk areas, premiums have risen by only about 15% to 20% since Katrina struck in 2005, says Tom Hayes, senior actuary for the National Flood Insurance Program. To find out your home's flood risk and get premium information, go to, where you can also search for a local agent. Don't put off purchasing insurance till a storm is predicted: There's a 30-day wait before coverage takes effect.

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Because coverage is capped, a number of private insurers, including Chubb and Fireman's Fund, offer to supplement federal insurance and increase coverage limits to the same level as your homeowners policy. Private policies also provide more-extensive coverage than the federal plan. For instance, they will insure your possessions for their replacement value (federal coverage is limited to depreciated value) and will pay for living expenses if you have to move temporarily because of flood damage.