What is Flood Insurance & Do You Need It?

Flood insurance is a type of property insurance that protects a home from losses caused by flooding. So, what exactly constitutes a flood? Simply put, it is an excess of water on normally dry land. Flooding can occur as a result of heavy or prolonged rain, coastal storm surges, melting snow, clogged storm drainage systems, or even levee dam failure. Flooding can cause significant damage to a home, and if you don't have flood insurance, you won't be protected from the damage to your home and belongings.

Did you know that flooding is the most common natural disaster in the United States? You might be surprised how much damage a few inches of water can cause to your personal belongings and property. In fact, one inch of water in your home can cost you more than $25,000 in damage.

Not only should homeowners in coastal states be concerned, because flood damage frequently occurs in low or moderate risk areas. That is why, regardless of where you live, flood insurance for homeowners is critical for protecting you against loss and damage to your home and belongings.

Want to ensure that your home and family are safe in the event of an emergency? Stay with us as we go over the fundamentals of flood insurance protection and how it can provide you with peace of mind when you need it the most.

Does Homeowners Insurance Cover Flood Damage?

A standard homeowners insurance policy only covers general water damage in certain circumstances, such as the following:

  • Burst pipes, as well as other plumbing problems and malfunctions
  • Overflow caused by a malfunctioning appliance, such as a water heater or sump pump
  • Water seepage from a roof leak
  • Vandalism

Storm surges and floodwaters are typically not covered under a homeowner's insurance policy. In this case, you'd need to supplement your existing homeowners insurance policy with a separate flood insurance policy. This separate catastrophe insurance will specifically cover water damage caused by flood events.

What Is the National Flood Insurance Program?

The Federal Emergency Management Agency (FEMA) manages the National Flood Insurance Program (NFIP), which provides flood insurance policies for all types of homes in participating communities. This coverage extends to rental properties as well as those in high-risk flood zones. The NFIP or FEMA do not issue the actual insurance policies. Instead, they're available from most major insurance companies, and some even provide private flood insurance to supplement NFIP coverage.

An NFIP flood policy will cover up to $250,000 in building damage and $100,000 in contents damage. However, it is critical to understand that NFIP policies only cover flooding-related damage. They do not provide protection against non-flood water damage, such as that caused by burst pipes or roof leakage. What an NFIP flood policy covers for your home and belongings is as follows:

Building coverage:

  • The insured structure and its foundation
  • Plumbing and electrical systems
  • Appliances such as built-in 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
  • Curtains

How Much Does Flood Insurance Cost?

The NFIP governs flood insurance policy pricing, which is primarily determined by a property's flood zone. An agent will consider the following factors when determining the cost of your policy:

  • Your house's structure and proximity to the coast or another body of water
  • Your chosen coverage (the replacement cost value or actual cost value)
  • Your property's elevation
  • 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 per year. The maximum for residential structures under NFIP policies is $250,000 in building coverage and $100,000 in contents coverage.

Of course, all of the aforementioned factors can have an impact on how much you pay each month. A Preferred Risk Policy (lower cost flood insurance coverage) includes both building and contents coverage for one low to moderate risk area. Some communities have implemented flood-prevention measures, making them eligible for NFIP discounts. Your insurance agent will be able to assist you in obtaining the best price for your home's coverage.

Who Needs Flood Insurance?

If you're like most people, you probably believe that flood insurance is only necessary if you live in a high-risk area. However, FEMA reports that more than 20% of flood claims come from properties located outside of high-risk flood zones. Because most home and renters insurance policies do not cover flood damage, you'll need coverage to protect your home and finances.

Depending on where you live, purchasing flood insurance or obtaining excess flood insurance may even be required. Federal law requires regulated or insured lenders to require flood insurance on properties in high-risk flood zones. If you live in a flood-prone area and have previously received federal disaster assistance, you'll also need flood insurance. If this applies to you and you still do not have flood insurance, you may be declared ineligible for future disaster assistance.

Finally, even if you do not live in a high-risk area, your insurer may require it. Check out FEMA's map of high-risk areas in your state to better understand your flood risk.

Free Quotes for a Homeowners Insurance Policy that Fits Your Needs and Budget

Protecting your home from natural disasters is essential no matter where you live, and we're here to make the process of finding home insurance coverage easier than ever. You can choose a policy and get coverage in minutes thanks to our quick and affordable free online comparison of home insurance rates. Get your free quote today and enjoy the peace of mind that your home and finances are well protected if disaster strikes.

What About Hurricane Insurance?

When considering flood insurance, you may also consider hurricane insurance coverage. Hurricanes are one of the most common causes of flooding in hurricane-prone areas. Hurricane insurance can be difficult to obtain because hurricanes cause damage in three ways: rain, wind, and flooding. Flooding caused by a hurricane, like other types of flooding, is not covered by homeowners insurance, and you will need flood insurance.

However, most homeowners policies typically cover rain damage from hurricanes. Because rainwater does not come into contact with the ground before entering the home, the damages caused by hurricane rainfall should be covered by your homeowners insurance. Finally, wind damage coverage for hurricanes is location dependent. Most homeowners policies cover wind damage, including hurricane damage, but if you live in a high-risk coastal area, you may need to purchase a separate windstorm insurance policy.

Three types of insurance may be required for complete hurricane insurance coverage. Fortunately, each hurricane insurance policy will cover these high-cost damages to your most important investment—your home.