10+ years writing insurance and personal finance topics
Former associate finance editor for Investopedia
Jess is a subject matter expert in insurance, banking, and other personal finance topics. Her byline has appeared in numerous top web media, including Investopedia.
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
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A standard homeowners insurance policy can protect your home and property from many perils but not flood damage. To fill this gap, you can buy dedicated flood insurance. But whether you need to buy it depends on where you live and your mortgage lender’s requirements.
Understanding whether you need flood insurance and how much to buy is essential for protecting your home, as going without could be financially devastating.
Here’s what you should know about flood insurance requirements, including who needs it, how much you need, and where to purchase it.
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Who’s required to buy flood insurance?
A homeowner might need to buy flood insurance under a few circumstances.
Lenders often require it as a condition of a home loan, whether you opt for a government-backed loan or a conventional mortgage. This coverage helps protect the lender’s collateral in case a flood happens.
Additionally, if you buy a home in high-risk flood zones — also called Special Flood Hazard Areas (SFHAs) — your mortgage lender will generally require you to buy flood insurance. The Federal Emergency Management Agency (FEMA) maps out SFHAs based on the annual percentage chance a location might flood. You can get flood coverage through the National Flood Insurance Program (NFIP), which FEMA manages.[1]
Good to Know
In some cases, your lender might also obtain flood insurance on your behalf. This type of coverage is force-placed insurance, and lenders often require it if your current flood coverage is insufficient or your flood insurance policy has lapsed due to non-payment.[2]
Types of flood insurance
You can buy flood insurance through the NFIP, but you can also purchase private flood insurance coverage. Here’s what to know about each option.
National Flood Insurance Program
The NFIP is a federally backed flood insurance program for homeowners, renters, and businesses. The U.S. Congress created the program with the National Flood Insurance Act of 1968, and it aims to make it easier for people to get the flood insurance they need.
More than 50 insurance companies offer flood insurance coverage through the NFIP, and you can manage your policy through NFIP Direct. This type of coverage is available in nearly 23,000 participating U.S. communities.[3]
Here’s a look at coverage limits:
Residential properties
Up to $250,000 in structural coverage and $100,000 in personal property coverage
Commercial properties
Up to $500,000 in structural coverage and $500,000 in contents coverage
You can’t purchase loss of use coverage through the NFIP, and coverage from the program has a 30-day waiting period before going into effect.[4]
Private flood insurance
Private flood insurance is an option if NFIP coverage isn’t sufficient. For-profit companies offer this type of flood insurance, and it’s often a bit more flexible than NFIP coverage. For instance, insurance companies might offer loss of use coverage in addition to structural and personal property coverage.
You could also get higher coverage limits with a private insurer if the NFIP’s limits aren’t enough for your business, business equipment, home, or personal items.[5]
How to determine your flood zone
FEMA has the Flood Map Service Center (FMSC), which lets you search properties by address, place, or latitude and longitude coordinates to determine flood zones. Local government resources may also be available to help you figure out your flood risk.
Here’s how to determine your flood zone using the FMSC:
Enter your property address, town or city, or latitude and longitude coordinates.
Click “Search.”
Your search will return an official flood map highlighting your risk and flood zone designation, which you can use to guide your home search or flood insurance purchase decisions.
If you’re in a FEMA flood zone labeled with a “V” or an “A,” chances are you’ll need flood insurance. The following table provides a breakdown of the different flood zone classifications and risks.[6]
Flood Zone
▲▼
Risk Level
▲▼
Details
▲▼
Flood Insurance Required?
▲▼
Zones V and VE
High (SFHA)
High-risk coastal areas with added hazard from storm waves
Yes
Zones A, AE, AH, AO, AR, and A99
High (SFHA)
Risk stems from to proximity to a pond, stream, river, or protective barrier under construction
Yes
Zone B and X (shaded)
Moderate
May have decreased risk through flood mitigation efforts but can experience shallow flooding
No, but recommended
Zone C and X (unshaded)
Low
Lower risk of flooding but still some risk
No, but recommended
How much flood insurance do you need?
The NFIP has coverage limits for flood insurance. For residential properties, the limits are $250,000 in structural coverage and $100,000 for personal items. The value of your home and its contents, your total mortgage, and your lender’s requirements will factor into your coverage needs. The amount of flood insurance you need could also vary depending on the type of mortgage you have.
For instance, Fannie Mae has the following flood insurance requirements for SFHA properties it secures. Your coverage must equal the lesser of:
100% of the replacement cost value of the improvements
The maximum coverage amount available from NFIP
The unpaid principal balance (UPB) of the loan (or loan amount at the time of origination)
If the NFIP limits are too low, you might be better off obtaining a private flood insurance policy. This type of policy often comes with higher coverage limits, as well as more coverage options.
Cost of flood insurance
Flood insurance can be expensive, but the cost of your coverage will vary based on several factors, including:
The median cost of NFIP flood insurance nationwide is $786 per year, according to FEMA data. Annual median costs are highest in Hawaii, Massachusetts, and Connecticut, at $1,023, $1,106, and $1,174, respectively.
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How to buy flood insurance
In many cases, NFIP insurance may be sufficient, but people with high-value homes and personal property might want to consider private insurance. If you decide that NFIP flood insurance is the right choice, here’s how to buy it:
Review the NFIP Community Status Book to determine if your community participates in the NFIP. If it doesn’t, you may need private insurance.
If your community does participate, contact your current insurance company to determine if it offers NFIP flood insurance coverage.
Purchase a policy through an insurance company that sells NFIP flood insurance.
Here’s how to get private flood insurance if NFIP coverage isn’t sufficient:
Contact a local independent insurance agent to get information about companies offering private flood insurance.
Choose a company that best meets your needs.
Purchase a policy.
Flood insurance requirements FAQs
It’s a good idea to understand how much coverage you need when considering flood insurance policies. The following additional information can help answer your remaining questions about flood insurance requirements.
Does homeowners insurance cover flood damage?
No. Standard home insurance policies won’t cover flood damage. You’ll need separate flood insurance coverage if your home is in a designated high-risk flood zone.
What’s the purpose of flood insurance requirements?
The purpose of flood insurance requirements is to shield people from financial devastation in the event of a flood. Flood insurance can protect your home, business, and belongings.
If you live in a high-risk area and have a mortgage from a federally regulated lender, you’ll need to purchase a required flood insurance policy.
Does California require flood insurance?
Mortgage lenders for California residents in FEMA-designated high-risk flood areas will generally require residents to obtain flood insurance, typically as a condition of qualifying for a mortgage loan.
What does flood insurance exclude?
NFIP flood insurance comes with some exclusions. According to FEMA, your flood insurance won’t cover temporary housing and additional living expenses, properties and structures outside of an insured residential building, financial losses caused by business interruption, cars, personal property in basements, and more.
Should you buy flood insurance if you’re not in a flood zone?
You may want to purchase flood insurance if you’re not in a FEMA-designated high-risk flood zone. The decision of whether or not to buy coverage is up to you.
Flood damage can happen even if you live in a low-risk area, and it can be a major financial burden. Property owners in low-risk areas account for approximately 25% of NFIP claims.
Jess is a personal finance writer who's been creating financial and business content for over a decade. Her work is published on Investopedia, MoneyWise, NextAdvisor, The HuffPost, and more. Prior to freelancing full-time, Jess was an editor at Investopedia, The Balance, and FinanceBuzz. Connect with her on LinkedIn.
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
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