What is flood insurance? Your guide to coverage, costs, and how to buy.

Flood insurance is usually a separate policy from homeowners insurance that specifically protects your property from flood-related events. It’s not always necessary, but it’s worth considering if you live in a flood-prone area.

What is flood insurance?

Flood insurance is a type of property that can protect your home and property from flood-related water damage. Potential flooding scenarios may include:

Keep in mind that coverage can vary by policy, so be sure to read your terms, conditions, and exclusions to see what your plan includes.

Does homeowners insurance cover flooding?

Standard homeowner’s insurance policies do not usually cover flood damage, so you will need to purchase a separate plan if you want this coverage. Depending on your provider, you may be able to purchase a special endorsement as an add-on to your homeowners insurance, but it’s more common for you to purchase a separate policy.

What does flood insurance cover?

Flood insurance is usually divided into two categories: residential and personal property coverage. The former usually covers your home’s structure and built-in appliances, while the latter covers your belongings.

Here’s a look at some of the things you can find under each type of cover:

The spread of residential areas

• The structure of your house, including the foundation

• Air conditioning units and fireplaces

• Built-in appliances, such as refrigerators and dishwashers

• Garage and other detached buildings

• Permanently installed carpet

• Permanently installed panels, bookcases, and cabinets

• Plumbing and electrical systems

Personal property

• Your personal belongings, such as clothing, electronics, and furniture

• Carpeting is not already installed in your residence

• Certain high-value items, such as jewelry and art (usually up to a certain amount)

• Washers and dryers

• Curtains

• Food refrigerators and food containers

• Portable air conditioners and windows

• Portable microwaves and dishwashers

Read more: What does homeowners insurance cover?

Flood insurance not covered?

Flood insurance generally will not cover:

• Preventable damage, such as damage from moisture, mold, or mildew

• Cash, precious metals, and stock certificates

• Daily living expenses and temporary housing

• Financial loss caused by business interruption

• High value items above certain limits

• Landscaping

• Most of the cars and their parts

• Mudslides or other types of landslides, whether caused by a flood

• Outdoor equipment, including hot tubs, swimming pools, septic systems, patios, decks, and fences

Do you need flood insurance?

Generally, flood insurance is not required except in certain circumstances. For example, it may be necessary if you own a home or business in a Special Flood Hazard Area (SFHA) and have a government-backed mortgage. You may also need flood insurance if it’s a requirement of your mortgage, even if you don’t live in a high flood risk area.

How much insurance do you need?

Your loan terms may require you to have enough coverage to cover the remaining balance of your loan, but you generally want enough coverage to completely rebuild your home if necessary. This is different from covering the resale value of your home, which may be much lower than the cost of rebuilding.

You can estimate your required coverage by including the cost of rebuilding your home and replacing damaged or destroyed items.

Note that National Flood Insurance Program (NFIP) coverage is up to $250,000 for building coverage and $100,000 for contents coverage. If you need more than that, you may need to purchase an additional private policy to cover the gap or have a separate private policy that provides sufficient cover on its own.

How much does flood insurance cost?

According to FEMA, 37% of NFIP policies nationwide cost between $0 to $1,000 per year, while 32% cost between $1,000 to $2,000 per year for a single-family home. However, the final cost of your policy may vary, depending on these factors:

• Installation: Your total amount of cover and the type of cover you choose can affect your costs. For example, increasing personal asset limits is likely to increase your rates, while increasing your deductible should decrease them.

• Location: You may have to pay higher premiums in areas with heavy flooding than in areas with less risk.

• Home age: An older home may be more expensive to insure due to older fixtures and systems, which can be a big risk to your provider.

Read more: How much does flood insurance cost in every state?

How to buy flood insurance

You generally have two options for buying flood insurance:

1. Buy NFIP, a federally sponsored program

2. Buy a plan from a private insurer

If you already have a homeowners insurance policy, you should be able to contact your insurer about adding flood insurance. Many providers can write flood insurance through the National Flood Insurance Program. If yours doesn’t have that option, you can search for a suitable provider through the NFIP directory.

You can also compare options from private insurers for policies that are not backed by the government. Depending on your needs, you may be able to find higher coverage limits and additional plan options through a private insurance company.

How to lower the cost of flood insurance

Reduce your installation

Although this is not an ideal solution, lowering your premium is a quick and easy way to lower your insurance premium if you need to put some money back in your pocket. However, we would not recommend having less than enough cover to rebuild your home, if necessary.

Increase your deductible

Choosing a higher deductible is a straightforward way to lower your premium, but you should always remember that if you submit a claim, you have to pay that higher amount. There are pros and cons to this strategy, but it may make sense depending on your financial situation.

Provide Elevation Certificate (EC)

EC helps insurers assess your property’s flood risk, and you can also ask your local property manager about finding one. NFIP no longer requires EC to purchase coverage, but providing it can help lower your insurance costs.

Reduce your risk

If you consider the cost of flood insurance based on the flood risk of each area, you may be able to take steps to reduce your risk and lower your insurance costs. This may include elevating your utilities, such as water heaters and electrical panels, installing flood vents, and filling basements.

FEMA/NFIP vs. Private flood insurance

At a glance, the main difference between NFIP coverage, which is managed by FEMA, and private flood insurance is that NFIP coverage is federally supported. Besides, the difference is in the coverage ratio and overall coverage limits.

Generally, private flood insurance allows for higher coverage limits and wider coverage options. However, depending on your situation, you may not need more than what NFIP policies provide.

Read more: How FEMA flood insurance works

Flood insurance FAQs

When does flood insurance take effect?

It may depend on your insurance, but it is common for flood insurance to go into effect 30 days after the date of purchase. There may be no wait or a short wait if you renew your policy or your property is in a newly designated high flood risk area.

Is flood insurance necessary?

Flood insurance is generally not required unless it is specified in your loan terms. This can be the case if you live in a high-risk flood zone and have a government-backed mortgage, or if your lender requires flood insurance, regardless of where you live.

Can renters get flood insurance?

Yes, renters can get flood insurance through the NFIP or a private insurance company. This can often be a separate policy from a renters insurance plan.

Does flood insurance cover basements?

Yes, flood insurance can cover basements, but coverage may be limited by the terms and conditions of your policy. For example, heaters, heat pumps, circuit breaker boxes, and electrical boxes may be covered, but certain personal improvements and flooring may not be covered.

Can I get flood insurance outside of a flood zone?

Yes, you can buy flood insurance even if you don’t live in a high flood risk area. NFIP flood insurance is available to anyone who lives in one of more than 22,000 communities across the country, and you can purchase insurance through a private company as another option.

Does FEMA disaster assistance replace flood insurance?

No, FEMA disaster assistance does not replace flood insurance. FEMA disaster assistance is only available when the president of the United States declares a federal disaster, and FEMA grants may not always cover all losses. Flood insurance helps cover you in the event of flood-related events, even if they are not declared disasters.