What is Flood Insurance & Do You Need It?
Flood insurance is a type of property insurance that covers a dwelling for losses directly caused by flooding. So what constitutes a flood exactly? Put simply, it’s an excess of water on land that is normally dry. Flooding is caused by heavy or prolonged rain, coastal storm surges, melting snow, blocked storm drainage systems, and even levee dam failure. Flooding can cause significant destruction to a home—and if you don’t have flood insurance, you won’t be covered against the damages to your home and belongings.
Did you know that flooding is the most common type of natural disaster in the US? You may be surprised to learn how much damage even a few inches of water can inflict on your personal belongings and property. In fact, just one inch of water in your house can cause over $25,000 in damage.
And it’s not just the homeowners in coastal states that should be worried, because flood damage frequently strikes in low or moderate risk areas. That’s why flood insurance for homeowners is critical for protecting you against loss and damage to your home and belongings, no matter where you live.
Want to make sure your home and family are protected if an emergency strikes? Stick with us as we examine the basics of flood insurance protection—and how it will give you peace of mind when you need it most.
Does Homeowners Insurance Cover Flood Damage?
A standard homeowners insurance only covers general water damage under specific circumstances, including the following incidents:
- Burst pipes and other plumbing issues and malfunctions
- Accidental overflow from a malfunctioning appliance, like a water heater or sump pump
- Water seepage from a roof leak
A homeowners insurance policy generally doesn’t cover destruction or damage caused by storm surges or floodwaters. In this situation, you’d need to purchase a standalone flood insurance policy to supplement your existing homeowners insurance policy. This separate catastrophe insurance will provide coverage specifically for water damage that occurs from flood events.
What Is the National Flood Insurance Program?
The National Flood Insurance Program (NFIP), managed by the Federal Emergency Management Agency (FEMA), offers flood insurance policies for all types of homes in participating communities. This coverage includes rental homes, as well as those in high-risk flood areas. The actual insurance policies are not issued by the NFIP or FEMA. Instead, they’re available through most major insurance companies—and some offer private flood insurance that can supplement NFIP coverage.
An NFIP flood policy covers up to $250,000 in building damage and up to $100,000 in contents coverage. However, it’s important to know that NFIP policies only cover damage directly caused by flooding. They do not protect against non-flood water damage, such as that caused by burst pipes or water leakage from a roof. Here’s what an NFIP flood policy covers for your home and belongings:
- The insured building and its foundation
- Electrical and plumbing systems
- Built-in appliances, refrigerators, and stoves
- Window blinds
- Debris removal
- Detached garages
- Solar energy equipment
- Permanently installed bookcases, cabinets, carpeting, and paneling
NFIP contents coverage covers:
- Personal belongings such as clothing, furniture, and electronic equipment
- Certain valuable items such as original artwork and furs (limited to $2,500)
- Portable and window air conditioners
- Portable microwave ovens and portable dishwashers
- Carpets not permanently installed
- Clothes washers and dryers
- Food freezers and the food in them
How Much Does Flood Insurance Cost?
The NFIP regulates the pricing of flood insurance policies, which primarily determines rates based on a property’s flood zone. To assess the cost of your policy, an agent will look at the following:
- The structure of your home and its proximity to the coast or other body of water
- Your selected coverage (the replacement cost value or actual cost value)
- The elevation of your property
- The age of your home and number of levels
- Your property’s flood designation
According to FEMA, the average cost of a National Flood Insurance Program policy
is $700 annually. With NFIP policies, the maximum for residential structures is $250,000 in building coverage and $100,000 in contents coverage.
Of course, all of the above factors can impact how much you’ll pay each month. A Preferred Risk Policy (lower cost flood insurance coverage) offers both building and contents coverage for one price, but only for homes in low-to-moderate risk areas. Some communities have implemented flooding safeguards, which qualifies them for discounts under the NFIP. Your insurance agent will be able to help you get the best price possible for your home’s coverage.
Who Needs Flood Insurance?
If you’re like most people, you probably assume that you only need flood insurance if you live in a high-risk area. But according to FEMA, more than 20% of flood claims come from properties located outside high-risk flood zones. And because most home and renters insurance policies don’t cover flood damage, you’ll need coverage to ensure that your home and finances are well protected.
Depending on where you live, buying flood insurance or finding excessive flood insurance may even be mandatory. Federal law states that regulated or insured lenders must require flood insurance on homes located in high-risk flood zones. You’ll also need flood insurance if you live in an area prone to flooding and have received federal disaster assistance in the past. If this applies to you and you still lack flooding insurance coverage, you may be declared ineligible for future disaster aid.
Finally, even if you live outside a high-risk area, your insurer may require the coverage. To better gauge your flood risk, check out FEMA’s map of high risk areas in your state.
Free Quotes for a Homeowners Insurance Policy that Fits Your Needs and Budget
Protecting your home from natural disaster is a must no matter where you live—and we’re here to make the hunt for home insurance coverage easier than ever. Thanks to our fast and affordable free online comparison of home insurance rates , you can choose a policy and get your coverage—all in a matter of minutes. Get your free quote today and enjoy the peace of mind that if disaster strikes, your home and finances are well protected.
What About Hurricane Insurance?
When thinking of flood insurance, you might also wonder about hurricane insurance coverage. If you live in a hurricane zone, one of your main risks for flooding is hurricanes. Hurricane insurance can be tricky because hurricanes involve a few different aspects of damage: rain damage, wind damage, and flood damage. Like other types of flooding, the flooding damage caused by a hurricane isn’t covered by homeowners policies, and you will need flood insurance.
However, for the rain damage from hurricanes, most homeowners policies typically do cover damage. Rainwater doesn’t touch the ground outside before entering the home, so the damages caused by the rainfall in hurricanes should be covered by your homeowners policy. Finally, wind damage coverage for hurricanes will depend on where you live. Most homeowners policies cover wind damage including from hurricanes, but if you live in a coastal region that’s high-risk, you might need to purchase a separate windstorm insurance policy.
For complete hurricane insurance coverage, you could potentially need three types of insurance. Luckily, each policy for hurricane insurance will cover these high-cost damages on your most important investment—your home.