Flood insurance

Flood insurance covers losses from flooding, like water that rises after heavy rain or the ocean pushing inland during a hurricane. Standard home insurance doesn’t cover floods. Instead, you’ll need to add an endorsement to your home policy or buy standalone flood coverage for financial protection from resulting damage. 

As a homeowner or a renter, carrying flood insurance is a good idea — even if you don’t live near a body of water. According to Floodsmart.gov, approximately 32% of National Flood Insurance Program (NFIP) flood claims come from outside special flood hazard areas (the high-risk zones shown on federal flood maps), and just one inch of floodwater can cause over $25,000 in damage. 

What does flood insurance cover?

Flood insurance covers damage caused by flooding, including overflowing creeks and streams, storm surges, rapid snowmelt, mudflow, intense flash flooding, or a levee or dam breach. 

Coverage is generally broken into two parts: 

• Building (dwelling): Covers damage to the physical structure of your home. Coverage may include foundations, walls, electrical/plumbing systems, HVAC systems, built-in appliances, permanently installed fixtures like floors and cabinetry, detached garages (up to 10% of the building coverage limit), window blinds, and shutters. 

• Contents (personal property): Covers the belongings you keep inside your home. Covered items may include furniture, clothing, electronics, portable appliances, washers and dryers, food, area rugs, and valuables (some personal items will have separate coverage limits; for example, NFIP policies limit coverage to $2,500 for valuables).

Coverage details can vary, especially between policies issued by private insurers and those issued by the federal government through the NFIP, which the Federal Emergency Management Agency (FEMA) administers. 

To be eligible for coverage: Property losses must be caused by a legitimate flood. The National Flood Insurance Program defines a flood as when two or more acres of normally dry land area, or two adjoining properties, are inundated with water or mudflow. 

What flood insurance doesn't cover

Flood insurance — whether it's a standalone policy or an add-on to your home insurance — typically shares many of the same exclusions as a standard homeowners insurance policy, such as:

• Moisture or mildew that’s not a result of a sudden issue and could have been prevented with proper maintenance. 

• Outdoor property like pools, fences, decks, and landscaping

• Vehicles parked on the property

• Currency, precious metals, and valuable documents or papers

• Losses from sewer backups that were not caused by external flooding

• Losses from earth movements caused by floods

• Finished walls, flooring, home upgrades, and personal belongings in basements* 

• Living expenses when residents temporarily move out as home repairs take place*

*Specific to NFIP policies; your coverage may vary. 

Why it’s important to check your policy specifics: Coverage details can vary by insurer and policy. Always verify exclusions with the policy issuer for the most accurate coverage details. 

Do you need flood insurance?

Flood insurance is optional for many homeowners and renters — but experts recommend carrying it anyway. Standard home insurance doesn't cover flood damage, and without a separate policy, you're on the hook for repairs out of pocket.

For some, though, flood insurance isn't optional at all. You'll likely be required to carry it if:

• You have a federally backed mortgage (e.g., FHA, VA, USDA, or Fannie/Freddie loans) and the property is located in a Special Flood Hazard Area. In these instances, federal law generally requires flood insurance. You can check your address and its flood zone status with FEMA’s Flood Map Service Center.

• You have a conventional mortgage or other financing arrangement and the lender requires flood insurance, even if you don’t live in a high-risk area. 

• You live in a property that received prior federal disaster aid, even if the event didn’t occur while you owned the property. 

When it's worth considering, even if not required

Even if you don’t live in a high-risk area, you may benefit from flood coverage. According to FEMA, 99% of U.S. counties experienced flooding in the last 20 years. 

Floods can happen anywhere there is precipitation, so it’s a good idea to have flood insurance if you:

• Live in a moderate- or low-risk zone that has experienced flooding before

• Have a low-lying home (such as a home at the bottom of a steep hill), a home in a low-elevation area, or a home with a basement

• Couldn’t cover the cost of major water damage or property loss out of your own pocket

• Want the peace of mind that comes with knowing your home is covered for floods

Private flood insurance vs. NFIP policies

There are two major sources of flood insurance: private insurers and the NFIP. 

How does private flood insurance work?

You can buy flood insurance directly from several insurance companies. Coverage might be available as a standalone policy or as a home insurance add-on (called an endorsement).

Private flood insurance can cover more of your home and belongings than an NFIP policy. With the NFIP, the most it will pay out is $250,000 for your home's structure and $100,000 for your personal property — these caps are known as policy limits. If your home would cost more to rebuild or your belongings are worth more than that, a private policy may be worth considering.

Further, private policies may have shorter waiting periods — meaning less time between when you buy the policy and when your coverage actually starts — than the NFIP's standard 30 days. 

Plus, coverage may be more customizable from a private insurer than the coverage you get from an NFIP policy. For example, private policies might include the following, whereas NFIP flood policies will not include: 

• Additional living expenses (ALE): Private policies may help reimburse your living expenses, such as lodging and meals, if your home is deemed uninhabitable after a covered loss.

• Basement finishings: Private insurance may cover upgrades and finishings in basements, including walls, flooring, bathroom fixtures, and more. Coverage might also extend to personal belongings in the basement. 

However, policy availability varies by state and region. Private insurers can decline to offer policies in high-risk areas or decide not to renew your policy in any given year, which you don’t have to worry about with the NFIP. 

What is the National Flood Insurance Program (NFIP)?

The NFIP is a FEMA-administered, government-subsidized program that provides eligible Americans with flood insurance. To be eligible for coverage, you must live in one of over 27,000 participating communities. 

NFIP policies are backed by the federal government but purchased through private insurance companies — so you get government-set coverage terms with a local or national insurer handling the paperwork. Notable features include:

• Up to $250,000 in building coverage.

• Up to $100,000 in contents coverage — though payouts are based on the depreciated value of your belongings, not what it would cost to replace them today. Private flood policies may offer replacement cost coverage instead. Learn more about actual cash value vs. replacement cost value coverage.

• A 30-day waiting period before coverage begins. This can be waived if you're purchasing a home with a federal mortgage or your community's flood map has recently been updated.

During federal government shutdowns, sales and renewals of NFIP policies may temporarily pause.

NFIP vs. private flood insurance: Key differences

How much does flood insurance cost?

The average cost of an NFIP policy is $786 a year for a single-family home. FEMA uses a methodology called Risk Rating 2.0 to determine NFIP rates. Your rate will depend on factors such as your home’s distance to the nearest body of water, historical flood data, prior claims on the home, and your home’s replacement cost.

The average cost of flood insurance through a private insurer will depend on the factors discussed below, as well as how you purchase coverage — as a separate policy or an endorsement. Still, many homeowners can find lower-cost coverage through a private insurer.   

Factors that affect flood insurance cost

Here are several factors that affect how much flood insurance costs:

• Coverage limits and deductible: The more coverage you want, the more you will pay. In addition, choosing a lower deductible — the amount you pay out of pocket before insurance kicks in — will result in a higher policy price but lower out-of-pocket expenses following a claim. 

• Coverage type: You can buy coverage for the structure of your home (the building), your personal belongings, or both. Building coverage is generally more expensive because it comes with a higher policy limit and potential payout. 

• Flood zone risk level: FEMA labels a property’s flood zone as high-, moderate-, or lower-risk, based on the likelihood of flooding. Areas at higher risk for floods will cost more to insure than areas at lower risk. 

• Proximity to water: The closer you are to a body of water that can flood, the more you might pay for flood insurance. 

• Home elevation vs. base flood elevation: Base flood elevation (BFE) is the height that waters are expected to rise during a flood. If your home’s ground elevation is at or above the BFE, you might pay less for flood insurance. 

• Foundation type: Factors like the elevation of your home’s slab, whether you have a basement or not, and whether your home is elevated or not can affect the cost of your policy. 

• Flood openings: If your home’s crawlspace or enclosure has proper flood openings that allow water to flow through, you may qualify for a lower rate. 

• Equipment elevation: Elevating certain machinery, equipment, and appliances, such as HVAC systems and water heaters, may help you earn a discount. 

• Number of floors: Generally speaking, it costs more to insure single-story homes than multi-story homes because the entire living space sits at the lowest, most vulnerable elevation. 

• Home age and construction: Newer, elevated homes qualify for lower premiums than older homes with outdated materials. Concrete/masonry structures and homes with modern flood-mitigation features often pay lower rates. 

How to lower your flood insurance premium

There are many ways to reduce the cost of flood insurance:

• Check the FEMA Community Rating System. FEMA’s Community Rating System (CRS) is a voluntary program that allows communities to reduce NFIP flood insurance rates by up to 45%. Check whether your neighborhood is among the 1,500 participating communities. 

• Install flood vents. Installing flood vents in your foundation walls and garage can help you secure a lower rate. Flood vents allow water to flow through areas of your home, rather than putting pressure on the building. 

• Elevate utilities. Raising utilities like HVAC units, water heaters, and electrical panels at least 12 inches above the BFE can help you save. 

• Assume the previous owner’s NFIP policy. When you buy a home, the previous owner can transfer their existing NFIP policy directly to you. This lets you access the owner’s current rate, which may be more affordable than what you’d get on your own.

• Get an elevation certificate. Getting an elevation certificate showing your home’s elevation relative to the BFE could help you qualify for a discount with your insurance provider. If your property doesn’t already have an elevation certificate on file with the local floodplain manager, you can hire a licensed land surveyor, professional engineer, or certified architect to get one completed.  

• Elevate your home. Elevating your entire home can effectively raise the building above the BFE and lower the odds that floodwaters can get in. But this project would be extremely costly and may only be worth the effort for high-risk areas.  

• Shop around. Rates vary between NFIP and private policies, so it's worth comparing both before you commit. Keep in mind that private policies often come with broader coverage and a shorter wait before coverage kicks in — factors worth weighing alongside the price. 

How to buy flood insurance

You have two options for flood insurance: buy it through NFIP or go through a private insurer. 

Buying private flood insurance

You can shop around for a policy provided directly by private insurers, or ask your agent about adding a flood endorsement to your existing home insurance policy. 

Buying an NFIP policy

You can get a quote for an NFIP policy by visiting Floodsmart.gov or calling 877-336-2627. 

Many home insurance companies and agents also sell NFIP policies, so you can check with your existing insurer or shop around. Remember, NFIP coverage won’t take effect until 30 days after you buy the policy, so you’ll want to be proactive. Waiting periods may be shorter with a private insurer.

What to look for when comparing policies

It’s a good idea to get quotes from at least three different insurers. If you’re not sure whether you want private coverage or an NFIP policy, make sure to compare the two to understand the difference in coverage. 

Here’s what to look for when comparing policies: 

• Coverage limits: You want enough building coverage to pay for the full replacement cost of your home and enough contents coverage to replace your personal belongings. Private insurers typically offer higher coverage limit options than NFIP policies. 

• Deductibles: Check your deductible options and see how they affect your premium. Choosing higher deductibles usually equals lower rates, but you’ll pay more out of pocket for a claim. Lower deductibles reduce your out-of-pocket claim costs but result in a higher premium. 

• Exclusions: All flood insurance policies have exclusions, meaning damage or losses the policy won't cover. NFIP policies tend to have more exclusions than private insurance. 

• Actual cash value vs. replacement cost value coverage: For contents coverage, the NFIP only pays out based on your belongings' depreciated value (called actual cash value). Private policies may offer better terms, but coverage varies — so read the details carefully before choosing a policy.

• Policy prices: When comparing rates, use similar coverage limits and deductibles to ensure you’re making an accurate comparison.

• Basement coverage: Private insurance tends to offer more robust coverage for basements. If you have a finished basement or you store a lot of valuable items there, you may want to consider a policy from a private company. 

• Additional living expenses coverage: Some private flood insurance policies provide ALE coverage, which helps pay expenses if you need to move out of your home while repairs or replacements are underway after a flood. NFIP policies do not include this coverage. 

• Waiting periods: NFIP policies have a 30-day waiting period, with a few exceptions. Private insurers can offer shorter waiting periods, and coverage may even take effect immediately.