Today we are talking about negotiating flood insurance premiums when purchasing a home. When purchasing a home alot of different things can be negotiated, however negotiating flood insurance premiums can be very dangerous. Let's talk about that a little bit.

You have found your dream home, then you find out its in a high risk flood zone also known as a flood zone A or AE. So you consider walking away and then the owner says it has been a problem all these years, the property has never flooded, and how rate has been this same rate for the last 10 years. So it makes you feel a little better but you are still nervous so you ask the seller if they will be willing to knock off 3-5 years of flood premium. This all sounds great but it could create a disaster.

So where does the disaster occur, well lets talking about prepaying the flood premiums for the next 3-5 years. The National Flood Insurance Program only guarantees rates for 12 months. One reason is they make updates to the program each year like they did in April of 2019.  Many times these are rate changes like the average rate increase of 8% they recently announced. So when a seller gives you these premiums as you can see it could still put you in the negative fairly quickly. Another concern is if the property has flooded before and it floods one more time it could be added to the repetitive loss property list. This could skyrocket the flood premiums and make reselling the property very difficult.

Another concern with getting premiums prepaid up front is if the flood zone changes. So lets say you go from a flood zone A to a flood zone AE then your flood insurance premiums could significantly increase. Its not uncommon to see a 25-40% rate increase when this happens.

So can flood premiums be prepaid to any flood insurance company? The answer to this question is there are a few carriers that will allow this. Many call it a two or three year rate lock. They require that the full premium be paid up front but it does guarantee these rates for certain time frame. You can learn more about this option by clicking here.

As you can see getting flood insurance premiums paid up front may not always be as good as a deal as it sounds. If you have questions about the best way to do this or other flood insurance questions you can visit our website The Flood Insurance Guru or click the button below. Also subscribe to our YouTube channel and like our Facebook page where we do our daily flood educational videos.

Chris Greene


Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation