Flood insurance is designed to help homeowners, renters, and business owners cover losses caused by a flood. You can buy it to protect a building, the possessions in that building, or both.
Most standard homeowners policies don’t cover flood damage. So this separate insurance coverage is your best option for repairing or replacing property after rising water rises enters your home. In some areas, mortgage lenders can make buying flood insurance mandatory. Even if your lender doesn’t require flood insurance, you may want to consider it.
Read on for information that can help you decide if a flood policy should be part of your insurance coverage.
What Is Flood Insurance?
According to the Federal Emergency Management Agency (FEMA), just one inch of floodwater can cause up to $25,000 in damage. And that damage probably won’t be covered by your homeowners or renters insurance. You can, however, purchase a standalone flood insurance policy to help cover your losses.
A flood insurance policy is meant to cover losses directly caused by flooding or, as FEMA describes it, “an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.”
If your sewer backed up after heavy rainfall, or rising inland or tidal waters flooded your property, the damage would likely be covered by flood insurance. But if the backup wasn’t caused by flooding, the damage wouldn’t be covered by flood insurance. (Whether it’s covered by your homeowners insurance depends on your individual policy.)
Most people get their flood policy through the National Flood Insurance Program (NFIP), which is managed by FEMA and works with a network of insurance companies across the country. But some private insurance companies also offer their own flood policies, which are not government-backed.
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What Is Included in Standard Flood Insurance?
The NFIP offers two types of flood insurance coverage: one that covers buildings and another that covers the owner’s or renter’s personal contents.
A policy purchased through the NFIP can reimburse up to $250,000 in building damage and typically covers:
• Foundation walls, anchoring systems, and staircases
• Detached garages
• Electrical and plumbing systems
• Furnaces and water heaters
• Fuel tanks, well water tanks and pumps, and solar energy equipment
• Appliances, including refrigerators, stoves, and built-in dishwashers
• Permanently installed cabinets, paneling, and bookcases
• Permanently installed carpeting and window blinds
An NFIP policy can provide up to $100,000 in personal property damage, and typically covers:
• Personal belongings, such as clothing, furniture, and electronic equipment (TVs, computers, etc.)
• Valuables (like original artwork and furs) up to $2,500
• Portable and window air conditioners
• Washers and dryers
• Microwave ovens
• Carpets that may not be included under building coverage
• Curtains and other window coverings
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What Doesn’t Flood Insurance Cover?
There are a few things NFIP flood insurance doesn’t cover, even if the damage is directly caused by flooding. Items that aren’t covered include:
• Any property that’s outside the insured building (such as a well, septic system, deck or patio, fences, seawall, hot tub or pool, and landscaping)
• Cars and most other self-propelled vehicles and their parts
• Cash, coins, precious metals, stock certificates, and other valuable paperwork
• Damage from mold or mildew that could have been prevented by the property owner
Flood insurance also doesn’t cover costs incurred if you have to live in temporary housing because of damage to your property. Unfortunately, neither will the “loss of use coverage” you may have through your homeowners policy. (Loss of use coverage pays those expenses only when the reason you’ve been displaced is covered by your homeowners policy.)
What Does Flood Insurance Cover in the Basement?
The NFIP’s coverage for flood damage in the basement is limited to some specific (usually permanent or attached) items and cleanup. Some examples of what should be covered include:
• Central air conditioners
• Fuel tanks and the fuel in them
• Furnaces and water heaters
• Sump pumps, heat pumps, and well water tanks and pumps
• Electrical outlets, switches, and junction and circuit breaker boxes
• Unfinished drywall for walls and ceilings
• Attached stairways and staircases
• Foundation elements and anchoring systems required for building support
Most personal property kept in the basement isn’t covered, including clothing, computers, TVs, and furniture.
Where Can You Get Flood Insurance?
Federal flood insurance isn’t sold directly by the federal government. Instead, you can buy NFIP policies through private insurance companies, under what’s known as a Write Your Own (WYO) program.
The NFIP partners with more than 50 insurance companies, so you may be able to work with the same insurance agent or broker who helped you purchase your home and auto policies to get flood coverage.
You can get help finding an NFIP provider online at floodsmart.gov/ flood-insurance-provider or by calling the NFIP at 877-336-2627. You also can also check into any private, non-government-backed flood insurance policies that are offered in your area.
You may want to look at including flood insurance as part of your overall personal insurance planning. Don’t wait until you hear predictions of a storm heading your way to start inquiring about a policy, though. There is typically a 30-day waiting period for a flood insurance policy to go into effect.
How Much Does Flood Insurance Cost?
Like most insurance, the cost of a flood policy can depend on the coverage type (building and/or personal contents), the size and age of the building covered, the risk level in your location (based on your flood zone), and other factors, including whether you’re buying a private or NFIP policy.
According to a 2022 Forbes Advisor analysis of flood insurance rates, the average cost of one year of coverage with an NFIP policy is $995. And though that’s not nearly as much as the average cost of a homeowners policy, it can still be a hit to many household budgets.
You may be able to lower the cost of a flood policy by choosing a higher deductible. You can also elevate your home’s electrical panels, heating and cooling systems, and other utilities so they’re less vulnerable to water damage.
For renters, the NFIP offers contents-only policies for as low as $99 annually.
You can also look for a competitive quote on a private flood policy that isn’t backed by FEMA and the NFIP. Just make sure you’re getting a fair price from a stable company that is capable of paying out claims in the event of a major flood.
When Is Flood Insurance Required?
If you have a government-backed mortgage and your home or business is in a high-risk flood area, you are required to have flood insurance. If you don’t have a government-backed loan, your lender may still require that you purchase a flood policy. Even lenders in moderate- to low-risk locations may make it a loan requirement. (You may also be interested in Is Homeowners Insurance Required to Buy a Home?)
Who Should Buy Flood Insurance?
Knowing your designated flood zone can help you decide whether you want to prioritize purchasing flood insurance. You can find your zone by entering your address at the FEMA Flood Map Service Center at MSC.FEMA.gov.
Structures in zones A and V are at the highest risk, while those in zones B, C, and X are considered at moderate to minimal risk. Keep in mind, though, that you can still experience flood damage even if you don’t live in a high-risk zone. According to NFIP data, more than 20% of all insurance claims come from moderate- to low-risk zones.
If you’re moving to a new area where flood insurance isn’t required, you may want to speak with your real estate agent or neighbors about the area’s history and potential for flooding.
How Much Flood Insurance Do You Need?
In many ways, shopping for flood insurance is similar to how you buy homeowners insurance: Calculating how much you’ll need will depend on what you plan to protect and what it might cost to replace if it’s destroyed.
In fact, your homeowners insurance company may give you an idea of what it might cost to rebuild or repair your home if it’s damaged. Then you can add on the value of your furnishings and other personal possessions to decide how much flood insurance you need. (If you’re a renter, you can purchase a policy that covers only your belongings.)
Remember, there are limits to how much coverage you can get through an NFIP policy ($250,000 for a building and $100,000 for the contents). If your needs go beyond those limits, you may want to consider buying excess flood insurance through a private flood policy.
The Takeaway
Most homeowners insurance policies don’t cover flood damage, which can leave a big gap when it comes to protecting your home and belongings. Purchasing a separate flood insurance policy can help fill that gap, and it can be an important part of your overall insurance planning. Flood policies can cover the building itself, its contents, or both. Make sure you understand what isn’t covered by your policy, such as personal belongings stored in the basement or outside. An average flood insurance policy for homeowners costs $995 a year.
How can SoFi help? While we don’t offer flood insurance, we have teamed up with top carriers to help you find reliable homeowners and renters insurance online. With SoFi, you can easily search for the coverage you need at a price you can afford.
FAQ
What losses are covered by flood insurance?
A flood insurance policy covers direct physical losses caused by a flood. That could mean repairing or replacing your home, or the furnishings and other belongings in your home, or both.
How do I know if I’m in a flood zone?
Everyone is in a flood zone, but some areas are at a higher risk than others. You can find your zone by entering your address at the FEMA Flood Map Service Center at MSC.FEMA.gov.
Is flooding covered by homeowners insurance?
Some types of water damage are covered by a standard homeowners policy, but flooding usually is not.
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