Did you know that flood damage isn’t typically covered by homeowners insurance? That’s right. Your policy covers different types of damage, but if your home gets flooded, your home and your belongings aren’t covered by your homeowners insurance policy.
Here comes flood insurance to save the day! If you’re wondering whether you need flood insurance and which policy would be best for you, we’ve got you covered with our comprehensive guide.
What Is Flood Insurance?
Flood insurance is a separate insurance policy that’s available to homeowners. It covers losses to your home and belongings caused by environmental flooding.
Your homeowners insurance policy includes hazard insurance, which may cover some damage caused by flooding if the cause is considered a “covered” hazard.
Hint: Losses from flooding due to a busted water pipe are covered, but losses from a hurricane aren’t covered because the damage was caused by environmental flooding.
Is Flood Insurance Mandatory?
There are a couple of key factors that determine if you’re required to purchase flood insurance:
- If you’re in a high-risk flood area (also known as a Special Flood Hazard Area [SFHA])
- If you’re in a high-risk flood area and you have a government-backed mortgage
Even if you don’t live in an SFHA, your lender may require you to purchase flood insurance. If you’re looking to buy a home, be sure to ask your lender if that will be the case.
If you’ve ever received federal disaster assistance, you may be required to keep your flood insurance to receive future assistance.
When Should You Consider Flood Insurance?
Natural disasters are becoming more frequent and stronger than they were in the past. If you’re in a high-risk flood area, you’ll likely be required to purchase flood insurance. But flooding can happen anywhere it rains. Consider purchasing flood insurance no matter where you live.
Check FEMA’s Flood Map Service Center to see if you live in a high-risk flood area or FEMA’s Community Status Book to see if your community participates in the National Flood Insurance Program (NFIP).
It’s important to know that most flood insurance policies don’t take effect until 30 days after you’ve purchased a policy. Take that into consideration if you want your coverage to start before a storm season.
Low-risk flood areas
Small amounts of water can cause damage and rack up repair costs. Even in low-risk flood areas, paying for flood insurance will likely cost you less than if you didn’t have a policy and suffered unexpected flood damage to your home or belongings.
According to the Federal Emergency Management Agency (FEMA), one inch of floodwater can cause up to $25,000 in damage. And while some areas are more prone to flooding, floods can happen anywhere.
It’s important to know that flood maps (maps that indicate an area’s risk level for flooding) are always changing because the weather is always changing. Even if your home isn’t in a high-risk area now, it could be in the future.
What Types of Flood Insurance Are There?
There are two main types of flood insurance: National Flood Insurance Program (NFIP) policies and private flood insurance policies. NFIP policies are the most common, but private flood insurance may provide you with more coverage. It all depends on what you need, where you live and what you own.
National Flood Insurance Program
NFIP policies are managed by FEMA and backed by the federal government. They are available to homeowners in qualifying high-risk, moderate-risk and low-risk communities.
The NFIP offers separate policies for building coverage and contents coverage (think: your personal belongings). You may have to renew or rewrite your NFIP policy if your community no longer qualifies for NFIP coverage. You’ll receive a notice from your provider if your policy isn’t going to automatically renew.
Your other option to protect yourself from losses due to flood damage is to purchase private flood insurance.
Private flood insurance
You can elect to get a private flood insurance policy instead of an NFIP policy or you can get private flood insurance as well as an NFIP policy. Because of the limited coverage provided by NFIP policies (we’ll get to that later), most people get private flood insurance in addition to their NFIP policy because private flood insurance exceeds the coverage an NFIP policy provides.
But unlike your NFIP insurer, your private flood insurance provider can drop your coverage at any time if they believe the risk of insuring your property is too high.
Where Can You Get Flood Insurance?
If you’re looking for an NFIP policy, connect with one of their insurance partners through their website or see if your current insurance provider can write an NFIP policy. Remember, you must live in a participating NFIP community to qualify for a policy.
If you’re looking for a private flood insurance policy, contact your current insurance provider or shop around to see which insurance companies offer the best policy for you.
How Much Does Flood Insurance Cost?
On average, the combined cost of NFIP building coverage and contents coverage is approximately $800 – $1,200 per year. Your premium will depend on the level of flood risk in your area, the amount of coverage you want and/or need and your deductible (what you pay toward an insured loss). Generally, the more coverage you need, the more expensive your premium will be.
And whether you purchase a policy directly from NFIP or through an insurance company that can write NFIP policies, NFIP works to offer the same affordable rates across the country.
Because private flood insurance is based on your situation, your premium will be unique to your policy. So make sure you shop around for the best premium and coverage for you.
What Does Flood Insurance Cover and Not Cover?
There’s a lot of fine print in any insurance policy. Knowing what is covered by each policy can help you decide which option is best for your situation. The answer may even be that both types of policies are right for you.
With NFIP, you can purchase building coverage and/or contents coverage. They are separate, standalone policies with separate deductibles.
Building coverage, which covers up to $250,000 in damages, covers:
- Foundation walls and staircases
- Detached garages
- Fuel tanks, well water tanks and pumps
- Solar energy equipment
- Electrical, plumbing and heating systems (including water heaters)
- Refrigerators, stoves and built-in appliances
- Permanently installed carpets, cabinets, bookshelves and paneling
- Window blinds
Contents coverage, which covers up to $100,000 in damages, covers:
- Personal belongings (clothing, furniture and electronics)
- Valuable items (like original artwork valued up to $2,500)
- Washer and dryer, microwaves, portable and window air conditioners
- Carpets that aren’t included in your building coverage
Outside of its standard policy coverage, NFIP also offers a less expensive Preferred Risk Policy (PRP) to homeowners in qualifying low-to-moderate risk flood areas.
Private flood insurance typically covers everything an NFIP policy would – and more. Getting a private insurance policy can help cover damage that exceeds the NFIP’s $250,000 building coverage limit and $100,000 contents coverage limit. Since private flood insurance is created based on your needs, what each policy covers will be different.
Private policies also cover temporary living expenses. If you need to live somewhere else while your home is being repaired, a private flood insurance policy will likely cover your temporary housing and expenses.
Since private flood insurance policies are built based on what you need, you can generally get a lot more coverage than you would with an NFIP policy.
Be aware that NFIP coverage for basements, crawl spaces and ground-level spaces under elevated homes is limited. Wind damage and damage due to earth movement (think: earthquakes, landslides, sinkholes, etc.) aren’t covered under NFIP policies, even if the damage was the result of the same weather event that caused the flood damage. A separate wind insurance policy can be purchased if you live in an area that’s prone to tornadoes or hurricanes.
NFIP policies don’t cover temporary living expenses or damaged items that aren’t part of the home (like cars, decks or pools). Bottom line, if you’re purchasing an NFIP policy, be sure to ask what’s covered. That way you’ll know what you need to supplement with private flood insurance.
How much coverage do you need?
To calculate how much coverage you’ll need, find out how much it would cost to rebuild your home and replace your belongings. Reach out to your homeowners insurance provider and ask them for an estimate of how much it would cost to rebuild your home.
Then estimate how much your personal belongings are worth to make sure you have enough coverage to replace them, too.
With both estimates in hand, you’ll see if the NFIP policy provides enough coverage, if you’ll need to supplement with private insurance or if you should get full coverage with private insurance.
For example, if your home’s rebuild value is estimated at $400,000, you can get an NFIP policy that has a $250,000 limit and then supplement with private insurance, which would cover the $150,000 difference. You’d do the same math to figure out if you need coverage over the NFIP’s $100,000 contents coverage limit.
Can You Avoid Flood Insurance?
Part of the home buying process involves knowing if the home you want to buy is in a flood zone. You may be able to avoid purchasing flood insurance if you buy a home in a low-risk area. It all depends on how comfortable you are assuming the risk of paying for damages from an unexpected flood.
If you already own a home, consider sealing your basement or crawl space and moving utilities higher off the ground to avoid purchasing flood insurance.
FEMA flood maps are regularly updated with the help of local communities. Getting involved with your local community planning council is a good way to influence how flood maps are drawn and what resources are available for flood relief. Depending on your community’s flood plans and resources, you may be able to remove the area’s high-risk designation.
Don’t Let Your Dreams Get Flooded by Reality
Your homeowners insurance policy covers a lot of things, but damage to your home and belongings from a flood usually isn’t one of them. Rain happens. And anywhere it rains, it can flood.
Don’t let your dreams get flooded by reality. Flood insurance can save you the cost of major repairs in the event of flood damage to your home.
FEMA. “Flood Insurance.” Retrieved February 2022 from https://www.fema.gov/flood-insurance
State of Connecticut Insurance Department. “Flood Insurance Fact Sheet.” Retrieved February 2022 from https://portal.ct.gov/CID/General-Consumer-Information/Flood-Insurance-Fact-Sheet