Flood insurance: Everything you need to know

Aug 04, 2023

If you live in an area prone to flooding, having flood insurance is extremely beneficial.

According to Statista, more than 130 major flood disasters were recorded in the U.S. between 2010 and 2019. That's a significant increase from the previous decade, when only 23 flood disasters were recorded.

If you live in an area prone to flooding, having flood insurance is extremely beneficial. Standard home insurance policies typically exclude coverage for flood damage, even after a natural disaster, like a Category 4 hurricane.

In this article, we’ll explain the basics of flood insurance, including what it covers, how it works, how much it costs, and where to get flood insurance.

Flood insurance pays to repair or rebuild the physical structure of your home after a flood. You can also get coverage for your personal belongings. Most flood insurance policies are sold through the National Flood Insurance Program (NFIP), which is regulated by the Federal Emergency Management Agency (FEMA). However, some insurance companies also sell private flood insurance.

Flood insurance kicks in when your home or personal items get damaged in a flood. When you purchase flood insurance through the NFIP, you can either get building coverage, contents coverage, or both.

Building coverage pays to repair or rebuild the physical structure of your home if it gets damaged or destroyed by flood waters. It also covers major home systems, like plumbing and HVAC, as well as built-in appliances. Here's a full list of the things that building insurance covers:

Plumbing and electrical systems

Water heaters and furnaces

Stoves, refrigerators, and built-in appliances, like dishwashers

Permanently installed carpeting

Permanently installed cabinets, bookcases, and paneling

Window blinds

Foundation walls, staircases, and anchorage systems

Detached garages

Water pumps, solar energy systems, and fuel tanks

Contents coverage pays to repair or replace your personal items that get damaged or destroyed in a flood. Below are some examples of personal belongings that would be covered under an NFIP flood insurance policy:

Personal items, including clothes, furniture, and electronics

Curtains

Washing machines and dryers

Portable air conditioners

Microwaves

Carpets and rugs

Valuable items up to $2,500

Flood insurance policies from the NFIP provide comprehensive coverage for your home and/or belongings. However, there are some things that are not covered. Below are some expenses that flood insurance usually doesn't cover:

Temporary housing costs or living expenses while your home is repaired

Items on your property, such as wells, septic tanks, patios, decks, hot tubs, swimming pools, fences, and landscaping

Lost income due to business interruption

Precious metals, art, currency, or stock certificates

Cars, boats, and self-propelled vehicles

Personal property stored in the basement

It's important to remember that your home insurance policy does not provide any coverage for flooding, nor will it supplement a flood insurance policy. So, for example, most home insurance policies include coverage for temporary housing expenses after a claim, but it won't cover your living expenses after a flood.

If you live in an area that is prone to flooding, make sure you know what your policies do and do not cover. You may find some gaps in your coverage (such as with additional living expenses) that will require you to pay out-of-pocket if your home gets damaged in a covered flood loss.

Flood insurance is a standalone insurance policy. Some insurance companies also sell flood insurance as an endorsement to your home insurance policy. Flood insurance is available for all commercial and residential properties, even if you don't live in a flood zone.

When you purchase flood insurance from the NFIP, you must purchase building and contents coverage individually. They are not sold together as a bundled policy. For residential properties, you can get up to $250,000 in building coverage and up to $100,000 in contents coverage.

Flood insurance works like all other insurance policies. If your home or personal belongings get damaged or destroyed in a flood, you can file a claim with the insurance company that underwrites your flood insurance policy. Then, you get reimbursed for the losses, minus any deductibles.

According to FEMA, 40% of flood insurance policies cost less than $1,000 per year. Just over 30% of policies cost between $1,000 and $2,000 per year. However, there are several factors that affect the cost of flood insurance, including:

Whether you live in a flood zone

Whether you’re purchasing buildings, contents, or both types of coverage

Your deductible

The location of your structure

The design and age of the structure

Additionally, FEMA may look at other flood risk variables when calculating your rate, such as flood frequency, flood types, river overflow, coastal erosion, storm surge, rainfall, property characteristics, and distance from water sources.

The property elevation can also reduce or increase the cost of flood insurance. You may have the option to provide an Elevation Certificate to reduce the cost of your flood insurance premium.

Ideally, you should buy flood insurance as soon as you move into a new home. When you purchase flood insurance through the NFIP, there is a 30-day waiting period before your policy goes into effect. That means if you buy a flood policy during a hurricane warning or flood warning, you won't be able to use your benefits until that 30-day waiting period is over.

If you’re interested in purchasing flood insurance, you should contact an insurance agent or insurance company. Most large home insurance companies sell policies through the NFIP, like Liberty Mutual, Allstate, Auto-Owners, and Farmers.

If your insurer doesn't sell flood insurance, you can visit the FloodSmart page. Use the dropdown menu to select your state and see which insurance providers sell NFIP policies in your location. An insurance company can also walk you through the process of purchasing flood insurance.

Flooding is a risk for many homeowners, even if you don't live in a flood zone. Not to mention, repairing or rebuilding your home after a flood can be extremely expensive. According to FEMA, just one inch of floodwater can cause up to $25,000 in property damages. Without flood insurance, you don't have any protection against floods.

Flood insurance is a smart investment for all homeowners, but especially if you live in an area that experiences hurricanes, storm surges, and heavy rainfall. If you’re considering flood insurance, don't wait until a storm is on the horizon to purchase coverage. Remember, NFIP policies have a 30-day waiting period before your coverage goes into effect, so you won't be protected right away.

Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender's website for the most current information.

This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at [email protected].