Do I need flood insurance?

Flood insurance protects your home and personal property from flood damage, but it's not required by law unless you have a federally regulated mortgage.

Pat Howard 1600

Pat Howard

Published March 14, 2019

Flood insurance protects your home and personal belongings from flood damage, but it’s not usually required for most homeowners. However, if you live in a FEMA-designated, high-flood-risk area and you have a mortgage through a federally regulated or insured lender, or if you receive federal disaster assistance, your bank is mandated to require that you get flood insurance. Your mortgage lender can also require you to get flood insurance at any time, even if they’re not legally mandated to do so.

However, even if you don’t live in a high-risk area and there’s no government or lender requirement, you should consider flood insurance anyway. Coverage can be fairly cheap if you don’t live in a flood-prone area. And keep in mind that, although your homeowners insurance doesn’t cover flooding, your insurer may give you a deal on a policy or endorsement if you seek flood insurance through them.

Check out our flood insurance overview here

In this article:

When is flood insurance required?

There are a couple of instances where flood insurance is required by law:

  • If you live in a high-risk flood zone and have a mortgage with a federally backed lender, like a Federal Housing Administration (FHA) loan or VA loan.
  • If you live in a high-risk flood zone and receive federal disaster assistance, like FEMA grants or low-interest disaster loans from the Small Business Administration (SBA).

Private mortgage lenders can also require that you get flood insurance even though they’re not federally mandated to do so. But that’s dependent on the agreement between you and your lender, so be sure to go over the fine print of your mortgage contract before signing so that you’re aware of what they can and can’t require during your term.

I’m not required to get flood insurance. Should I get it anyway?

If you live in a high-flood-risk area or a “Special Flood Hazard Area”, there’s a good chance that your lender is going to require flood insurance like they require homeowners insurance.

But if they don’t, you should get coverage anyway. Over the course of a 30-year mortgage, homes in floodplains have a 25% chance of being flooded, and are five times more likely to incur flood damage than fire damage, according to the Insurance Information Institute (III). And that likelihood may be even higher if you live on the coast or by a river.

Additionally, all it takes is one inch of water in a home to cause more than $25,000 in damage, according to FEMA.

If you live in a moderate-to-low-risk flood zone, the chances of your residence being flooded are significantly less, but you should still seriously consider flood coverage. For starters, flood insurance in low-risk areas is cheap, costing people as little as $150 a year, according to the National Flood Insurance Program (NFIP), which also writes most flood policies. The statistics also point to flood insurance being a good idea, being that 20% of flood claims happen in moderate-to-low-risk areas, according to the III.

If you live in state that borders the gulf or a Southern Atlantic coastal state, you may want to consider flood insurance even if you don’t live in a flood hazard area. For example, more than half of the homes damaged by Hurricane Harvey’s flood waters were outside even the moderate-to-low-risk flood zones.

You should also consider flood insurance if you live near the following areas:

  • A newly developed area where water has nowhere to absorb
  • An area prone to wildfires where the soil is water-resistant
  • At the base of a mountain where water runoff or mudslides are common
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How much flood insurance do I need

You should have enough flood insurance to cover a complete rebuild of your home in the event that it needs to be gutted and rebuilt due to flood damage. You should also make sure you have sufficient coverage for all of your stuff inside the home.

You’ll also want to make sure you have replacement cost coverage for your home and personal belongings so you’re reimbursed the replacement value of your damaged property. To keep your insurance payments down, you may be tempted to go with actual cash value reimbursements, but we strongly advise against this. Actual cash value, while slightly cheaper than replacement cost, only reimburses you the depreciated amount of your damaged property, which could leave you paying more out of pocket for a loss.

When choosing flood coverage, you’ll typically run into a few different kinds of policies: a standard NFIP policy, a private “excess flood” policy to supplement your NFIP policy, and a private flood insurance policy or endorsement.

NFIP coverage

An NFIP policy — backed by the federal government and administered through private insurers — only covers your dwelling up to $250,000 and your personal property up to $100,000. Any detached structures on your property are covered by 10% of your dwelling coverage limit. A standard NFIP policy will only include dwelling coverage, so you’ll need to add personal property coverage separately for an additional amount.

Your NFIP coverage doesn’t include higher coverage limits other than the earlier stated amounts, and they don’t offer coverage for your additional living expenses if you’re forced to flee your home because of flood damage. However, those additional coverages are available in an excess flood policy, which you can use to supplement your NFIP policy.

Excess flood insurance

If your NFIP coverages aren’t enough, some insurance companies offer excess flood insurance to round out your NFIP policy. An excess flood policy typically means higher coverage limits or more favorable reimbursement terms for your home and personal belongings as well as additional coverage components like loss-assessment coverage and loss-of-use coverage.

Private flood insurance

Some insurance companies also sell their own private flood insurance independent of the NFIP. Private flood insurance coverage limits are typically higher than NFIP-backed policies, and in some cases the policies are cheaper.

Private flood insurance is typically available in the form of a standalone policy or endorsement to your home insurance policy.

You can find private flood insurance through excess and surplus carriers (carriers who only write flood insurance) or standard insurers (who may write your home and auto insurance in addition to flood insurance).

How to find out if you’re in a flood zone

To find out if your residence is located in a flood zone, FEMA has a handy search tool you can use. You simply plug in your address, and once the map is generated, it’ll indicate the date that the hazard map was created and what your flood risk is as of that date.

The date part is important, because although your home may sit in a “minimal hazard zone” according to the FEMA map, that may not tell us much if the map was updated 15 years ago. If you suspect your community’s flood map is outdated, check with your local insurance agent and get their take, or see if other policyholders in the area have flood coverage.

Flood coverage in low-risk areas can be pretty cheap, so adding flood coverage might be worth the additional protection and peace of mind.

How to get flood insurance

To get flood insurance, check with your homeowners insurance company to see if they sell NFIP policies, excess flood insurance, or their own private flood policy or endorsement. Nearly all standard insurance companies write and service NFIP policies, according to the III.

You should also keep in mind that there’s a 30-day waiting period on NFIP policies. Flood season in the U.S. typically begins in late spring and lasts until fall, so if your home is at risk, make sure your policy is in force far in advance of that.

Considering flood insurance? Be sure to speak with a licensed P&C agent at Policygenius who can set you up with invaluable flood coverage that protects your home and assets.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.