Flood insurance provides financial protection for property owners against damage caused by flooding, ensuring coverage for losses that standard home insurance policies don’t cover.
8+ years writing about insurance, taxes, and personal finance
Certified public accountant
Janet applies her experience in personal finance, taxes, and accounting to make complex financial topics accessible. Her byline has appeared on numerous web media.
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.
Mark FriedlanderDirector, Corporate Communications, Triple-I
Corporate communications director for Insurance Information Institute
20+ years in insurance and communications
As Director, Corporate Communications for Triple-I, Mark serves as the non-profit’s national spokesperson, sharing information and education on a wide array of insurance issues.
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Flood insurance provides financial protection if a flood damages your home or other real estate property. You may already have homeowners insurance, but a standard homeowners policy doesn’t cover flood damage.
The two primary sources of flood insurance are the National Flood Insurance Program (NFIP) and private flood insurance companies.
Here’s what you should know about how flood insurance works, what it covers, where to buy it, and how much it costs.
Quick Facts
Flood policies through the NFIP generally have a 30-day waiting period before coverage begins.
Your mortgage company may require you to carry flood insurance if you live in a high-risk area.
Flood insurance costs vary based on location, elevation, coverage amount, deductibles, and flood mitigation measures.
What is flood insurance?
Flood insurance helps cover the cost of repairing and replacing your home and belongings after flood damage. Floods can be the result of heavy rains, storm surges, melting snow, or a dam failure. Standard homeowners insurance policies typically don’t cover flood damage, leaving you, as the property owner, vulnerable to substantial financial losses.
Around 14.6 million properties in the U.S. are at immediate risk of flooding, according to a flood database developed by the First Street Foundation, a non-profit research and technology organization.[1] The organization expects that figure to reach 16.2 million by 2050 because of climate change.
Despite this high risk, only about 4% of homeowners nationwide have flood insurance.[2]
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If a covered flooding event damages your home or property, you file a claim with your insurance company. This involves documenting the damage and providing the necessary information to support your claim.
The insurance company will review your claim. If it approves the claim, your insurance company will pay for the covered damages to help you repair or replace your property.
If the insurer denies your claim, it should provide a reason based on the policy terms.
What flood insurance covers
Flood insurance covers a range of items and structures, depending on the specific terms of your policy. Here’s a breakdown of what flood insurance through the NFIP typically covers:
The building structure, including electrical and plumbing systems, furnaces, and water heaters
Flooring
Cabinets, paneling, and built-in bookcases
Detached garages
Fuel tanks, well-water tanks and pumps, and solar energy equipment
Your personal belongings, like clothes, furniture, and electronics
Appliances
Valuable items like artwork and furs (up to $2,500)[3]
What flood insurance doesn’t cover
Flood insurance through the NFIP doesn’t cover:
Temporary housing and additional living expenses while your home is being repaired or is uninhabitable
Property outside of the home, like landscaping, septic systems, decks and patios, fences, hot tubs, and swimming pools
Financial losses from business interruption
Currency, stock certificates, precious metals, and other valuable papers
Cars and other vehicles
Personal property kept in your basement
You may have other insurance policies that cover some of these exclusions. For example, if a flood damages your car, you might have coverage under your car insurance policy’s comprehensive coverage.
Where to buy flood insurance
You can buy flood insurance through two primary sources: the National Flood Insurance Program or a private insurance company that offers flood policies. Here’s a closer look at the offerings available from each.
National Flood Insurance Program
Congress established the NFIP in 1968 to reduce the financial impact of flooding and encourage communities to adopt and enforce floodplain management regulations.
The Federal Emergency Management Agency (FEMA) oversees the program, providing coverage for property owners, renters, and businesses in participating communities.
While the NFIP itself is a government program, policies are sold through nationally recognized insurance companies. When policyholders file claims, NFIP-backed insurance companies must pay the total amount they’re entitled to under the policy’s terms.[4]
Good to Know
NFIP policies can be more affordable, but they have fewer coverage offerings than many private insurance policies. NFIP policies are also not available everywhere. You can’t purchase an NFIP policy unless your community participates in the program.
Private flood insurance
Private flood insurance is an alternative to NFIP coverage. Private insurance companies offer it to provide more options and flexibility for property owners who might need higher coverage limits or broader coverage than what’s available through the NFIP.
State insurance departments regulate private flood insurance policies to ensure they meet state-specific standards and requirements. When a policyholder files a claim, the insurance company reviews and, upon approval, pays the claim according to the policy terms.
You can buy flood insurance through the NFIP or a private insurance company through your home insurance agent.
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How much flood insurance costs
The cost of flood insurance varies depending on the type of policy you buy, your location, and the specific property’s details.
Nationwide, flood insurance for single-family homes through the NFIP averages $786 per year. Prices for policies through private insurers can vary dramatically due to the differences in the criteria listed above. If you live in a low-risk area, you could pay more affordable rates, while insurers could refuse you coverage if you live in a high-risk area.
You may also be able to tie insurer-related discounts into a policy from a private company.
Factors that affect flood insurance costs
Some of the factors that affect your flood insurance rates include:
Your location’s flood risk
FEMA creates flood maps to determine the risk of flooding at different locations. People with properties in high-risk areas pay higher rates than homeowners in areas with a low risk of flooding.
Type of coverage you buy
Building coverage alone is generally less expensive than coverage for the building and its contents.
Policy limits and deductible
Policies with higher limits and lower deductibles are more expensive than those with low limits and high deductibles. This is because lower-deductible policies require the insurer to take on more risk.
Design and age of your home
Some newer properties might be built with flood mitigation in mind, which can lower your premiums. For example, you can install flood vents in foundation walls and other enclosed areas to allow water to flow through your garage or crawl space. This prevents flood waters from applying pressure to walls, which could otherwise cause structural damage.
Location of your contents
If your utilities and other contents are elevated, your risk of flood damage — and thus your flood insurance premiums — may be lower.
Flood insurance FAQs
Here’s some additional information about flood insurance to help you better understand your options when shopping for a policy.
How quickly does a flood insurance policy go into effect?
NFIP policies have a 30-day waiting period before coverage starts. Private insurance companies may offer shorter waiting periods. Read your policy carefully to understand the applicable deadlines.
Is flood insurance required?
If you live in a high-risk flood zone, your mortgage company may require you to buy flood insurance. Coverage in other areas is optional but recommended.
What’s the difference between flood insurance and homeowners insurance?
Homeowners insurance covers damage to your home and its contents from events like fire and theft, but it doesn’t cover flood damage. Flood insurance specifically covers damage to your home and belongings caused by flooding.
Who provides the most flood insurance?
More than 5.1 million flood insurance policies are currently in force.[5] But flood policies through the NFIP have coverage caps. The maximum limit for residential structures with one to four living units is $250,000 in building coverage and $100,000 in contents coverage. If you need higher limits, you may need to purchase flood insurance through a private insurance company.
If you don’t have a mortgage, do you still need flood insurance?
Flood insurance isn’t required if you don’t have a mortgage. But it’s a good idea because it helps protect your property and assets from the financial impact of flood damage — especially if you live in a flood-prone area.
FEMA. "National Flood Insurance Program Fact Sheet."
Janet Berry-Johnson
Janet Berry-Johnson, CPA is a freelance writer with a background in accounting and income tax planning and preparation. She's passionate about making complicated financial topics accessible to readers. She lives in Omaha, Nebraska with her husband and son and their rescue dog, Dexter. Visit her website at www.jberryjohnson.com.
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.
Mark FriedlanderDirector, Corporate Communications, Triple-I
Corporate communications director for Insurance Information Institute
20+ years in insurance and communications
As Director, Corporate Communications for Triple-I, Mark serves as the non-profit’s national spokesperson, sharing information and education on a wide array of insurance issues.
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