Do I need flood insurance? (2022)
If you live in an area where tropical storms or heavy rain showers occur regularly, you might be surprised to learn that a standard insurance policy for renters or homeowners will not cover flood damage. Although you can add a personal flood insurance policy issued by the Federal Emergency Management Agency (FEMA), this will add hundreds of dollars per month to your home insurance premium.
Due to its high cost, most homeowners only purchase flood insurance when required by mortgage lenders. However, if you live in a flood zone, the cost of flood insurance can pales in comparison to the cost of restoring your home’s structure after major water damage. If you decide to purchase flood insurance, we at Home Media’s appraisal team recommend that you obtain several quotes to compare and choose the best plan.
Does home insurance cover flooding?
Homeowners and renters insurance policies do not cover damage resulting from flooding. The most standard home insurance policies specify that water damage to carpet, building and personal property is only covered if the water comes from inside the house. For example, while your building coverage will compensate you for damage caused by a burst pipe, it will not cover the same damage if it was caused by water seeping into your basement.
This doesn’t mean you have to live in fear of the next natural disaster. You can purchase separate flood insurance coverage that extends your policy benefits to include flooding. Like home insurance, flood insurance policies have deductibles and premiums that you will need to consider when filing flood insurance claims.
Flood insurance policies are federally standardized, which means that insurance companies do not set prices for flood insurance policies. FEMA determines flood insurance premiums and deductibles after considering a location’s frequency and risk of flooding.
Home insurance providers with flood endorsements
National Flood Insurance Program (NFIP) flood insurance is issued by private insurance companies after the policies are approved by the federal government. You can find flood insurance through some major insurance companies. Here are some examples of insurers offering NFIP policy options:
If you’re having trouble finding a flood insurance provider, you can explore a comprehensive list of FEMA-licensed insurers offering policies here.
Who needs flood insurance?
You may need flood insurance if your home is in a high-risk flood zone. FEMA defines a high-risk flood zone as an area with at least a 1% chance of experiencing flooding in a full calendar year. If you are using a mortgage to purchase property in an area known to be flooded, your mortgage lender will likely require you to purchase flood insurance as a condition of your loan.
High risk flood zones
FEMA has created a flood map of high-risk flood zones. To determine if you are in a flood zone, visit FEMA online and enter your address. You will see a map with a series of colored areas defined by the area name. If you see that your home is within the boundaries of a flood zone, you will need to purchase flood insurance.
How much does flood insurance cost?
Flood insurance can be expensive compared to other types of insurance because it comes with its own premium and deductible that you have to pay on top of what you put into your home insurance. Flood insurance rates and coverage are based on the area of your home. Homes in high flood risk areas will pay more for coverage.
According to FEMA, the average cost of flood insurance through the NFIP is $771 per year. However, the specific flood insurance rate you will pay will vary depending on the location of your home and the value of your policy. If you live in an apartment, you may be able to access more affordable flood insurance with only contents coverage protection. Consult a flood insurance provider in your area to explore costs and coverage options.
How can I buy flood insurance?
Although FEMA determines whether or not an insurance company can sell flood insurance, most policies are issued by independent insurers. Through the Write-Your-Own (WYO) program, the NFIP enables more than 50 participating insurance companies to issue these policies. If your insurance company is not participating, you can purchase flood insurance directly from the NFIP. In some areas, you may be able to purchase a private flood insurance policy with coverage limits higher than those set by the NFIP.
To purchase flood insurance, start by reviewing the policy details on your home insurance policy. Consult FEMA’s flood map to determine if flood insurance is necessary based on your risk. While homeowners in low-risk areas are not required to purchase flood insurance to obtain mortgages, anyone can purchase flood insurance.
The next step is to contact your insurance agent to request more information about flood insurance. If you already have a home insurance policy, you may want to purchase coverage from the same provider if they offer flood protection to simplify your payments. Your agent will explain what flood insurance does and does not cover and your monthly payment.
If you get flood insurance through the WYO program and need to file a flood insurance claim, you will do so with your private insurance policy – not FEMA. Your insurer will check, process and pay your claim.
The Bottom Line: Do You Need Flood Insurance?
Whether you need flood insurance will mainly depend on your location. You don’t have to buy flood insurance if you don’t live in a high-risk flood zone. However, you cannot assume that you will never experience flood damage if you do not live in a flood prone area. Check out FEMA’s flood zone map and assess your unique flood risk to determine if flood insurance is worth the extra expense.