Flood insurance

Flood insurance is a special type of policy that covers your house and personal belongings from flooding caused by storm surges, runoff from prolonged rain and melting snow, mudflow, and dam failure.

Pat Howard 1600


Pat Howard

Pat Howard

Property and Casualty Insurance Expert

Pat Howard is a senior editor at Policygenius specializing in property and casualty insurance. His work has been featured on Property Casualty 360, Fatherly, MarketWatch, and more.

Updated July 13, 2020|4 min read

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Flood events are by far the most common type of natural disaster, accounting for 90% of all catastrophes in the United States. Flooding can also be deceptively destructive — a single inch of floodwater can cause up to $25,000 in cleanup and home repairs, according to the Federal Emergency Management Administration (FEMA).

But many property owners aren’t aware that homeowners insurance won’t pick up the bill if their house is damaged by a flood, causing many to be underinsured once disaster strikes. To ensure your home and personal belongings are fully covered for water damage losses due to external flooding, you’ll need a flood insurance policy.

Key Takeaways

  • Flood insurance is a type of property coverage that covers your home and personal belongings from external water damage

  • The federal government National Flood Insurance Program (NFIP) offers flood coverage through private insurance companies

  • The average annual flood insurance premium is around $700

  • Your policy price will likely depend on what flood zone you’re in, among other factors

What is flood insurance?

Flood insurance is a type of property coverage that covers what your homeowners insurance doesn’t: damage caused by floodwaters. To protect your home and personal belongings against floods caused by high tides, overflowing lakes and rivers, flash flooding and even groundwater flooding, you’ll need separate flood coverage.

Homeowners in every state can get flood insurance through the National Flood Insurance Program (NFIP), a division of FEMA. Flood insurance policies through the NFIP are typically sold by private insurance companies and administered by the federal government. Most major homeowners insurance providers offer FEMA flood insurance coverage in participating communities.

Some insurance companies also may offer their own private market flood coverage that you can add supplementally to your homeowners insurance — meaning your insurer can list it as a coverage add-on in your homeowners policy — or purchase on its own as a standalone policy.

How much is flood insurance?

The average NFIP flood insurance policy costs around $700 per year, according to the latest data released by FEMA. But the price of flood insurance can vary greatly depending on your home’s age, style of build, and what flood zone it’s in according to the flood insurance rate map (FIRM).

If your property is located in a moderate- to low-risk area, you may be eligible for a low-cost flood policy through the NFIP. Also called a Preferred Risk Policy (PRP), these policies can run as low as $200, according to FEMA.

Read more about the cost of flood insurance here.

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What does flood insurance cover?

Flood insurance covers direct physical losses caused by a flood or, in other words, an abundance of water on land that is normally dry and affecting two or more acres of land or two or more properties, according to the NFIP. Flooding can be caused by an overflow of water during a hurricane storm surge, water runoff from rivers after heavy rain, mudflow after a wildfire-ravaged area receives heavy rainfall, and erosion from heavy waves hitting the shoreline.

There are two kinds of flood insurance policies you can purchase from the NFIP: building coverage for your home, and contents coverage for your personal belongings.

Building coverage

Building coverage covers your home’s foundation, electrical, plumbing systems, furnaces, water heaters, HVAC units, and flooring if they’re damaged by a flood. Debris removal and cleanup after a flood event are also covered. Up to 10% of your building coverage limit (the maximum amount you’re paid by your insurer after a loss) can be used to cover water damage losses to detached structures like your garage or shed.

You can typically get up to $250,000 in building coverage through the NFIP.

Contents coverage

Contents coverage covers personal property such as your clothing, electronics, furniture, and appliances, if they’re damaged in your home as a result of a flood.

The NFIP offers up to $100,000 in contents coverage.

What isn’t covered by flood insurance?

Flood insurance doesn’t cover internal flooding, so if your plumbing leaks or the sewage line backs up and floods your basement, it won’t be covered unless the backup was caused by a flood event. Flood insurance also won’t cover damage caused by moisture or mold (in many cases, neither will your homeowners insurance).

For protection against internal water damage from burst pipes and ordinary sewer backups, you’ll need to add a water backup coverage endorsement to your homeowners policy.

There are also coverage limitations for the basement of your home. For example, if you have a finished basement and the finished walls and floors incur water damage, your insurer won’t reimburse you for the repairs. Flood insurance also won’t cover personal belongings stored in the basement.

Do I need flood insurance?

Unlike homeowners insurance, flood insurance isn’t usually required by lenders. But your lender is mandated by law to require flood insurance if all of the following conditions apply:

  • Your home is located in a Special Flood Hazard Area**, a FEMA-designated high-risk flood zone

  • You have a federally secured mortgage through the FHA or VA, or a mortgage owned by Fannie Mae and Freddie Mac

  • The community where the property is located participates in the NFIP

Keep in mind that your lender can still require you to get flood insurance even if you only live in a moderate- to low-risk area. If your home is in an SFHA but your community doesn’t participate in the NFIP, you won’t be able to get flood insurance through the NFIP, but your lender could require that you get private flood insurance.

Learn more about when you should get flood insurance here.

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