For people with homes near bodies of water, flood insurance is top of mind. But flooding can happen anywhere. Due to climate change, natural disasters, including flooding, are on the rise—so it’s more important than ever to carry a flood insurance policy

However, most homeowners find flood insurance confusing. This article will demystify the insurance product, including:

  • What it does and doesn’t cover
  • What constitutes flooding and flood damage
  • How much it costs and how to save

Ready to save now? Use the Insurify rate comparison tool to uncover the best flood coverage in your area. Our tool is completely confidential and free to use. Only purchase when the price is right. 

What Is Flood Insurance?

Flood insurance is property insurance that protects buildings and contents against direct physical loss from flood damage. Flood insurance can cover residential and commercial property. In this article, we will focus on residential flood insurance. 

Flooding is never covered under a standard home insurance policy. People who need flood insurance to protect their homes buy a policy through the National Flood Insurance Program (NFIP), a private insurer, or both. 

What Flood Insurance Covers 

Flood insurance comes in two parts. Building coverage is mandatory and protects the structure of your home and other buildings on your property, including:

  • Foundation and staircases
  • Detached garages
  • Anchorage systems
  • Solar systems
  • Built-in appliances, like stoves and dishwashers
  • Electrical and plumbing systems
  • Furnace and water heater
  • Fuel tank and well-water tank
  • Permanently installed carpet, cabinets, and bookcases
  • Permanent air conditioners

Contents coverage is optional and protects your personal property. That not only means clothing, furniture, and jewelry, but also non-permanent appliances like washers, dryers, microwaves, and air conditioning units. Non-permanent window dressings and carpeting are also covered. 

What Flood Insurance Doesn’t Cover

Many crucial exclusions exist in typical flood policies:

  • Personal belongings kept in basements or crawl spaces
  • Currency, stock certificates, and other valuable documents
  • Landscaping, decks, walkways, and patios
  • Swimming pools and hot tubs
  • Septic systems and water wells

Any damage, including mold and mildew damage, that could have been avoided by the property owner is not covered by flood insurance. Keep home maintenance and records up to date with receipts. This will ensure you can make a claim if you receive any pushback during the claims process. 

Your vehicle(s) is also not covered by flood insurance. You need comprehensive auto insurance for that. The same goes for your boat and RV.

Finally, additional living expenses (ALE) coverage is excluded from your policy. ALE covers the cost of a hotel, laundry services, additional fuel expenses, and other costs associated with living away from your home. 

To get exclusions covered, you’ll need a special rider or tailored policy from a private insurance provider. 

What Is the Definition of a Flood for Insurance Purposes? 

The federal government defines a flood as “a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property).”

Inundation can be caused by:

  • Overflow of inland waters, such as in riverine floods
  • Overflow of tidal waters, such as in coastal floods and storm surge
  • Mudflows, often occurring in areas of erosion
  • Collapse of natural or man-made levees caused by erosion

Types of Flood Insurance: National Flood Insurance Program vs. Private Insurance

There are two ways to get flood insurance. The most common way is through the National Flood Insurance Program (NFIP). The NFIP is operated by the federal government through the Federal Emergency Management Agency (FEMA).

NFIP flood insurance covers residential buildings up to $250,000 and contents up to $100,000. Standard policies cover the actual cash value (ACV) of your property. ACV means you’ll be reimbursed for the value of your property minus depreciation. When possible, you should opt for replacement cost value (RCV) policies, which cover the cost of replacement regardless of depreciation. 

If you need coverage beyond what’s offered through the NFIP, you can purchase a private flood insurance policy. Private insurers offer higher coverage limits and wider flexibility of coverage options than the NFIP

However, private plans are often more expensive, and some do not qualify as mandated flood coverage with your lender

How Much Does Flood Insurance Cost?

The cost of flood insurance coverage will depend on a number of factors. The first is your home’s flood risk. If you live in a floodplain or other high-risk area, you should expect to pay more. Homes in moderate-risk areas tend to cost three-quarters to half as much as properties in high-risk areas.

Low-risk flood zones are the least expensive to insure. And while flood coverage is usually not required in these areas, it’s still a good idea. There is no such thing as a no-risk flood zone.

Approximate Annual Cost of Flood Insurance by Flood Risk
High Risk $900 to $1,200
Moderate Risk $500 to $700
Low Risk $300 to $500

To find your home’s flood risk, you need to look up your property on a flood insurance rate map. You can find this at FloodSmart.gov

Other Flood Insurance Cost Factors

Beyond the flood risk in your area, your flood policy cost is determined by:

  • The size and design of your home
  • The age of your home
  • Your home’s building materials
  • Your home’s flood-proofing (e.g., elevating appliances)
  • Your flood deductible

The minimum deductible for NFIP building coverage is $1,000 for policies of $100,000 or less and $1,250 for policies over $100,000. The maximum deductible is $10,000, which comes with a 40 percent discount on your premium. Your lender, however, may have additional limitations on your deductible amount, so be sure to consult with them in regards to your policy. 

The minimum deductible for contents coverage is $1,000. 

How to Purchase Flood Insurance

You can purchase NFIP flood insurance policies through a local insurer. You cannot buy a policy directly from the federal government. For most homeowners, you can buy an NFIP policy through the same insurer as your homeowners policy

Remember that an NFIP policy with one insurance company is virtually the same as NFIP coverage with another company. What varies is the quality of customer service and technology offered by the insurer. And, because different companies have different business costs and risk assessments, some insurers can provide you with the same policy for less. 

This is an excellent advantage for policyholders who are willing to compare rates often. Whenever they find a lower rate with an insurance carrier, they can take advantage of savings quickly. Just remember that there’s a 30-day waiting period when you switch plans. 

Purchasing Private Flood Insurance

If you have a high-value home or need insurance riders, you should purchase a policy through a private insurer. Be sure to make a list of everything you need to be covered. Then, work with your insurance agent to create your flood plan. 

When possible, take advantage of the often cheaper plan you can get through the NFIP. For most homeowners, carrying two separate plans is less expensive than one comprehensive plan through a private insurer

Frequently Asked Questions

What is considered flood insurance?

Flood insurance must cover your home’s structure. While other flood insurance exists to protect property, flood insurance that meets mandates covers the integrity of buildings. Flood insurance mandates ultimately protect mortgage lenders, as it only mandates that the physical structure—which is the collateral for your loan—be protected. 

Does flood insurance cover heavy rains?

In most cases, flood insurance will cover flood damage caused by heavy rains. Important exclusions include avoidable flood damage. For example, damage resulting from a window left open during heavy rainfall. Damage resulting from other homeowner negligence, like not repairing roof damage, also won’t be covered. 

Does flood insurance cover mold?

Flood insurance will cover mold damage and remediation so long as the mold results from flooding and not due to homeowner negligence. Mold from other causes is typically not covered by a standard homeowners insurance policy, except in special cases when you have an HO-3 (broad form) policy. To get comprehensive mold coverage, you should add a rider to your home insurance plan. 

Do renters need flood insurance?

While renters aren’t typically required to carry flood insurance, it’s still a good idea—especially if they live in a high-risk flood zone. Luckily, flood coverage is inexpensive for renters, as it only needs to cover the home’s contents. 

How Homeowners Save on Flood Insurance

Flood insurance can be expensive, especially when you live in a high-risk flood zone or Special Flood Hazard Area (SFHA). However, you can still find ways to reduce your flood insurance premium:

  • Take advantage of discount programs.
  • Raise your deductible, but not so high that it’s unaffordable. 
  • Install flood resistance measures like floodwalls, swales, and sump pumps.
  • Use landscaping to reduce flooding—mulch, rain gardens, and draining driveways.
  • Install rainwater catchment systems.
  • Ensure the ground is graded away from your home. 
  • Compare flood insurance rates before you buy and then every six months. 

Often, lower rates for flood insurance are available but hard to find. But the Insurify rate-comparison tool can help you uncover lower rates now and in the future. Fill out one short and confidential form to compare rates from top companies in your area. 

Want to speak with an expert before you buy? Our talented insurance agents are available to help you understand your options and lower your rates. 

Compare Quotes For Free

See Your Options

Compare & Save Today.

Updated September 14, 2021

J.J. Starr is a health and finance copywriter who enjoys helping readers find the information they need. In addition to her background in banking and financial advising, she is also a poet with an MFA from New York University. She lives in Amherst, Massachusetts. You can learn more at jjstarrwrites.com.