Have you recently purchased a home near a large body of water? If so, you'll likely want to purchase flood insurance. Regular homeowners insurance usually doesn't cover flooding, so you'll need extra insurance to provide that protection. If you're new to waterfront home ownership, flood insurance may seem like a bit of a mystery. However, there's actually a well-defined system in place that determines flood insurance rates. Here are the four most important factors in determining your rates:

Your FEMA flood zone. The Federal Emergency Management Agency, also called FEMA, has designated a zone rating to all areas of the country that are near water. The zones signify how vulnerable the area is to flooding. Zones starting with the letters A and V are considered to be Special Flood Hazard Areas and have the highest risk. Zones B and Z are considered moderate risk. Zones C and X have minimal risk. The less vulnerable your area is, the less your rates will be. You can contact FEMA and order a zone map to see the zone in which your home is located.

Your community's flood prevention actions. Each town, city, or county is responsible for its own flood prevention. Some towns may take very proactive steps like building levees or dams to prevent flooding. Others may take little action. Your community's preparedness heavily influences your rate. If you contact your local government, they should be able to tell you whether the area is eligible for preferred flood insurance rates.

Your home's vulnerability. Some homes are more vulnerable to flooding than others. For example, if you have a basement, your flood insurance rates could be significantly higher than a home without a basement. Similarly, if your home is on stilts or has a strong drainage system, you could get a discount. Elevation also plays a big role. If your home is elevated on a hill above the body of water, you could get a discount that a home at or below water level wouldn't get.

Your coverage and deductible. Flood insurance has many of the same components that other forms of insurance have. You'll choose a coverage amount, which should be sufficient to replace your home and your belongings in the event of a major flood. The higher your coverage amount, the higher your rates will be. Also, you'll have a deductible, which is the amount you pay out of pocket before your insurance benefit kicks in.

The higher your deductible, the lower your rates. If you keep a lot of money available in savings, you may want to go with a high deductible to save money on flood insurance.

Contact a flood insurance agent in your area for more information. They could review your home and give you an estimate on rates.