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flood insurance
Flood Insurance

Flood Insurance

national flood insurance program

America has experienced an urban flash flooding event every 2-3 days for the past 25 years. The vast majority of flood victims are uninsured. Flooding is caused by spring thawing (snow and frozen grounds melting in the spring), heavy rains, snow melt runoffs, flash floods, and mudflows. No region is safe from flooding. All 50 states are subject to flash floods. Communities particularly at risk are those located in low-lying areas, near water, or downstream from a dam. According to insurance information institute, 90% of all disasters in US involve flooding but only 27% of homeowners have flood insurance.

What is flood insurance?

fema flood insuranceFlood insurance is a type of property insurance that covers a dwelling for losses sustained by water damage specifically due to flooding caused by heavy or prolonged rain, melting snow, coastal storm surges, blocked storm drainage systems, or levee dam failure. In many places, a flood is considered a major event, and the damage or destruction it causes are uncovered if you do not get supplemental insurance.

How does Flood Insurance work?

A type of catastrophe insurance, a flood insurance policy is different than the basic hazard insurance coverage contained in a homeowners insurance policy. Standard homeowners insurance covers interior water damage, due, say, to a burst pipe, or weather events like tornadoes and rainstorms. However, it generally doesn’t cover destruction or damage caused by floodwaters. Property owners who live in an area prone to this sort of natural disaster usually need to get special coverage.

flood insurance quote

flood insurance quote

Flood insurance basically works just like other insurance products: The insured (the home- or property owner) pays an annual premium based on the property’s flood risk and the deductible they choose. If the property or its contents are damaged or destroyed by flooding caused by an external event (rain, snow, storms, collapsed or failed infrastructure), the homeowner receives cash for the amount of money required to repair the damage and/or rebuild the structure, up to the policy limit. Unlike a standard homeowners policy, flood insurance requires that a policyholder buy separate policies to cover a dwelling and its contents. A separate coverage rider is needed to cover sewer backup if the backup was not caused by the rising floodwaters.

What does Flood Insurance cover?

To understand what flood insurance covers, you need to know three things first:

  1. Standard homeowners insurance doesn’t cover flood damage at all. It’ll cover some damage from rain, but if your home is filled with water as a result of rising bodies of lakes, rivers, streams, and oceans, it won’t cover you.
  2. Flood insurance is mostly purchased from the National Flood Insurance Program (NFIP). It’s a federally regulated program with two policies:

flood insurance costOne that covers your actual home (building property) up to $250,000

One that covers your personal property up to $100,000

You can buy one or both.

  1. You might have to buy it. If you’re taking out a mortgage on a property that’s in a high-risk zone (also called a Special Hazard Flood Area), your lender will require you to buy a policy in order to get the loan. If you just want to buy a policy, you have to make sure your community participates in the national flood program. Flooding affects every state, so you’re probably eligible.

What the Federal Flood Insurance Program Covers

NFIP’s building property policy covers the cost to rebuild or the actual value of your home (whichever is less). That includes:

Your home and its foundation

Electrical and plumbing systems

HVAC equipment like air conditioning, furnaces, and water heaters

Kitchen appliances, including your refrigerator, stove, and built-ins such as your dishwasher

Permanently installed carpeting over an unfinished floor

Permanently installed wallboard, paneling, bookcases, and cabinets

Window blinds

Detached garages (limited to 10% of your home policy)

Debris removal

Water heater

The NFIP policy that covers your personal property will cover stuff like: 

Clothing, furniture, and electronic equipment


Window AC units

Portable microwaves and dishwashers

Carpets not covered by your building policy


Your freezer and frozen food

Up to $2,500 in valuables, such as art and furs

What does Flood Insurance not cover?

allstate flood insuranceEqually important is knowing what’s not covered by flood insurance. Here are a few examples of the types of property and expenses that fall outside the scope of a basic flood insurance policy, according to the NFIP:

Moisture or mold/mildew damage that “could have been avoided by the homeowner”

Currency, precious metals, and paper valuables, like stock certificates

Outdoor property such as decks, fences, patios, landscaping, wells and septic systems, and hot tubs and pools

Living expenses, like temporary housing (if flood damage deems your home uninhabitable).

Cars and other self-propelled vehicles (but your auto insurance may offer some protection for your car if you have comprehensive coverage).

In addition, flood insurance provides limited, if any, coverage for below-ground rooms like crawl spaces and basements, and their contents, the NFIP says. Some items in these spaces (like the furnace) are typically included under building coverage. Others (like the washer/dryer) are usually covered under personal contents coverage. And some items ─ like your personal effects ─ may not be covered at all when they’re kept in below-ground rooms.

Do I need Flood Insurance?

geico flood insuranceIt’s important to note that, as a rule, homeowners and renters insurance does not cover damage from flooding. To protect your home, be sure to understand the risk of flooding and what your insurance options are.

You will need flood insurance if you live in a designated flood zone. But flooding can also occur in inland areas and away from major rivers. Consider buying a flood insurance policy if your house could be flooded by melting snow, an overflowing creek or pond, or water running down a steep hill.

Flood insurance is available for renters as well as homeowners, but a special policy is required as flood insurance—like earthquake insurance—is not part of standard homeowners coverage. Flood policies are provided by the federal government and some private insurers.

If you think you need flood insurance, don’t wait for a flood season warning on the evening news to buy a policy—there is a 30-day waiting period before the coverage takes effect.

How much does flood insurance cost?

progressive flood insuranceThe average flood insurance cost is $739 a year, according to NerdWallet’s analysis of 2021 NFIP rates. (This figure doesn’t take into account policies purchased through companies that aren’t backed by the NFIP.) Flood insurance for renters can be much cheaper if you need to cover your personal belongings only. The NFIP advertises rates as low as $99 a year for contents-only coverage.

However, these rates are changing. As of Oct. 1, 2021, FEMA is using a new methodology called Risk Rating 2.0 to set its premiums. Designed to price flood insurance more equitably, the methodology uses additional variables such as flood frequency and rebuilding cost to evaluate each home’s chance of flooding.

Existing policyholders whose rates are set to go down under the new methodology can take advantage of the lower price starting Oct. 1. Those whose rates are set to increase will see the higher rates with their first renewal on or after April 1, 2022.

Average cost data under Risk Rating 2.0 is not yet available.

Is Flood Insurance the same as Hazzard Insurance?

The hazard insurance section of standard homeowners insurance policies does not cover floodings from external natural causes, like heavy rainstorms, or man-made ones, like a dam break. Only specifically named flood insurance, a separate insurance policy, can protect against that sort of destruction or damage.

Flood insurance is usually optional for mortgaged homeowners in what are normally considered low-risk flood areas. It may even be optional for mortgaged homeowners in high-risk flood areas, depending on the type of loan. However, homeowners will be required to buy flood insurance if they take out a mortgage from a lender that is federally regulated or insured (such as an FHA mortgage) and buy a home in a high-risk flood zone (also known as a Special Flood Hazard Area).2 In most cases, the homeowner will have to pay for flood insurance every year until the mortgage is paid off.

When someone takes out a mortgage, the home serves as collateral if the borrower stops making mortgage payments. When a property is financed, the lender often has a greater financial stake in the property than the borrower. If one of the lender’s assets is damaged by floodwaters and the borrower abandons the home and stops making mortgage payments, the lender is caught in a losing position. To eliminate this risk, many lenders require the homeowner to purchase flood insurance.

Flood insurance will provide money to repair or even rebuild a home if it is damaged or destroyed by flooding. If the homeowner has to file a claim, they will only be responsible for paying the deductible. As a result, the homeowner will keep the home and keep making mortgage payments, and everyone will be happy.

How to purchase Flood Insurance?

If you plan to purchase flood insurance, you have several options. The NFIP works with more than 60 different insurers to sell its policies, so you may be able to get flood insurance from the same company that offers your existing auto or homeowners coverage. You must live in one of the 24,000-plus communities that participate in the program in order to buy an NFIP policy. 

If NFIP insurance isn’t available in your area, you’ll have to go through a private company selling its own flood insurance policies. In fact, its premiums may undercut the NFIP’s, so it’s smart to gather quotes before committing to a flood insurance policy.

Don’t wait until a hurricane is barreling down on your home to get covered. There’s typically a waiting period between when you purchase flood insurance and when the coverage takes effect. For NFIP policies, the waiting period is usually 30 days, while other policies can have shorter periods of 10 to 15 days.

If you live in a high-risk area, you may need to provide your insurer with an elevation certificate before it can determine your premium. This document includes the lowest floor elevation of your home, which the insurer will use to determine your home’s flood risk. You can get an elevation certificate from your local floodplain manager or hire a land surveyor or engineer to complete one for you.

flood insurance companies


Floods are the most widespread natural disaster aside from wildfires. 90% of all U.S. natural disasters declared by the President involve some sort of flooding. Flash floods can bring walls of water from 10 to 20 feet high. A car can be taken away in as little as 2 feet of water. If you live in low lying areas or just a city near water, you run a huge risk of damage to your house, equipment, furniture, electronic goods etc. You need to have adequate coverage for floods or else your liability or loss can run high.

Contact and we will guide you to adequately protect yourself from the threat of flood.

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