- 90% of natural disasters in the U.S. involve flooding.
- A standard home insurance policy won’t cover flood damage.
- You can buy flood insurance through the National Flood Insurance Program (NFIP) or from a private insurance company.
- The NFIP only covers up to $250,000 in building damages, whereas a private policy may provide more coverage.
99% of U.S. counties were impacted by a flood between 1996 and 2019, according to the Federal Emergency Management Agency (FEMA). A standard homeowners insurance policy does not cover flood damage, and without flood insurance you could be hit hard by out-of-pocket expenses.
The following information can help you decide if flood insurance is right for you and how much you might expect to pay for coverage.
Inside this article
What is flood insurance?
Flood insurance, purchased separately from your homeowners insurance policy, covers your house and belongings for damage caused by torrential rains, hurricane-related flooding, mudflow, inland flooding and flash floods.
Most homeowners who purchase flood insurance buy it through the National Flood Insurance Program (NFIP), which is backed by FEMA, but you may also be able to buy a policy in the private flood insurance market.
What does flood insurance cover?
Through the NFIP, there are two types of flood insurance: building coverage (for your home) and contents coverage (for your personal items). You can purchase one or both types of coverage, depending on your needs.
Building coverage, also known as dwelling coverage, can help with the cost to rebuild or repair several parts of your home, including:
The structure of your home, including foundation and walls
Heating and cooling systems, such as furnaces, air conditioners and water heaters
Electrical or plumbing systems
Permanently installed carpeting
Permanently installed cabinets, paneling and wallboards
Cooking stoves, refrigerators and built-in appliances
Well-water pumps and tanks, solar energy equipment and fuel tanks
Contents coverage will protect the following:
Washers, dryers, portable air conditioners and other appliances
Valuables such as jewelry and artwork (up to $2,500)
Carpets and rugs
Oher personal belongings
What isn’t covered by flood insurance?
Damage not covered by NFIP flood insurance includes:
Damage caused by pipe bursts (your homeowner’s insurance policy may cover broken pipes)
Property outside of your house’s base foundation, including decks, patios and pools
Mold and mildew that could have been avoided
Living and/or lodging expenses if your house is uninhabitable during repair
Vehicles damaged by flooding (comprehensive car insurance typically covers this)
Who needs flood insurance?
If you live in an area that is considered high-risk for flooding, you should purchase flood insurance. This type of coverage is often required if you:
Have a mortgage. Lenders usually require flood insurance for properties in flood zones. Additionally, people living in Special Flood Hazard Areas (SFHA) with a government-backed mortgage are required to purchase flood insurance. Even if you live outside of a high-risk area, your lender may still require you to have flood insurance.
Received disaster assistance. If you received a FEMA grant or loan-interest loan from the Small Business Administration as a result of previous flooding, you need to purchase flood insurance if you want to be eligible for emergency assistance in the future.
Even if you aren’t required to purchase flood insurance or live in a location that isn’t currently considered high risk, you may still want to purchase coverage. More than 40% of NFIP claims filed from 2014 to 2018 did not occur in a high risk area. Even one inch of water can require $25,000 worth of repairs to a home.
While high-risk areas have a one-in-four chance of flooding during a 30-year-mortgage, low- to moderate-risk communities are also susceptible to flooding due to poor infrastructure, broken water mains, snow melt, rain and more.
Flood risks change over time along with natural variations in climate and landscape. The FEMA Flood Map Service Center and your local government resources can help you determine if flood insurance is a wise investment for you.
How much is flood insurance?
The average annual cost of flood insurance through the NFIP is $995, according to a survey of NFIP rates across the nation.
How much you pay for coverage will depend on the following:
Location of and flooding risk to your property
Composition and layout of your home, including building materials, number of floors and any elevated machinery, such as a central air conditioning unit or hot water heater
Type and use of your property
Type of policy you purchase (building only or building and contents)
The amount of coverage you purchase
The deductible you select
Whether you purchase coverage from NFIP or a private insurer
Average cost of NFIP flood insurance by state
|State||Average annual cost of NFIP flood insurance|
How to buy flood Insurance
Homeowners can buy flood insurance through the National Flood Insurance Program or from a private insurer.
National Flood Insurance Program
The NFIP is managed by FEMA, an official arm of the United States government, which works with more than 50 private insurance companies to provide flood protection nationwide.
NFIP offers flood insurance with both building and contents coverage for home and business owners, as well as contents coverage for renters. Homeowners can purchase up to $250,000 in building coverage and both homeowners and renters can purchase up to $100,000 in contents coverage.
To purchase a policy through the NFIP, you must live in one of the 23,000 U.S. communities that participate in the federal program.
Federal flood insurance policies written by insurance companies that participate in the Wrote Your Own (WYO) program. A contractual agreement between insurance companies and FEMA, the WYO program allows insurance companies to write and service federal flood insurance policies under their own name, while still being underwritten by the NFIP itself.
The easiest way to purchase NFIP flood insurance is by calling your existing insurance provider. If you don’t have an insurance agent, you can locate a company that sells flood insurance at FloodSmart.gov or by calling the NFIP directly at 877-336-2627.
NFIP policies have a duration of one year and typically include a 30-day waiting period before the coverage goes into effect. As such, it’s important you purchase coverage well before an anticipated storm.
Private flood insurance
Private flood insurance is becoming increasingly popular as more companies enter the market and gain access to sophisticated models to predict risk, according to the Insurance Information Institute.
One of the primary reasons homeowners may choose private flood insurance is due to higher policy limits. The NFIP only provides up to $250,000 in building coverage and $100,000 in contents coverage.
Private companies can offer coverage that extend past the NFIP caps, with some companies offering up to $5 million in building coverage and $1 million for personal belongings.
Private flood insurance policies may also have shorter waiting periods than NFIP coverage and cover loss of use expenses, like for temporary lodging or restaurant meals while your home is being rebuilt after a flood. Policy features vary, however, so always check with a potential insurance provider before purchasing coverage.
A private flood insurance policy can act as supplemental insurance to bridge a coverage gap or it can act as a standalone policy. However, keep in mind that private insurance companies can decline your request for coverage or cancel your policy if the property is considered too risky by the insurer.
NFIP vs. private flood insurance
|NFIP||Private flood insurance|
|Can only purchase up to $250,000 in building coverage and $100,000 in contents coverage||Typically offers coverage with higher building and contents limits|
|Backed by the federal government||Backed by the insurer|
|30-day waiting period||Shorter waiting period|
|Does not cover loss of use/lodging||Typically covers loss of use/lodging|
Tip: When deciding if you need flood insurance, make sure to go over every detail of your standard homeowners insurance and NFIP flood insurance. There are many limitations around what’s covered and not covered.