Flood Insurance: Do I Really Need It?

Revised: March 2014

There are many types of conditions that can result in a flood: Spring thaws, heavy rains, hurricanes and the rapid accumulation of rain after a wildfire are just some of them. And, while certain areas are prone to flooding, it can happen anywhere and at any time. According to Floodsmart.gov, floods are the No. 1 natural disaster in the United States. "Anywhere it rains, it can flood," the federal government-run site declares.

So, are you prepared? Beyond readying your home and developing a family emergency plan, being prepared for a flood means understanding a bit about insurance.

A sign with the words, High Water, sits in flood waters on a suburban street.

Flood Insurance Provides Coverage for a Flood-Related Loss

Most important is the fact that a standard homeowners insurance policy typically doesn't cover flood damage. And because floods can occur anywhere, you should strongly consider purchasing a separate National Flood Insurance Program (NFIP) flood policy through an insurance agent. The NFIP is run by the Federal Emergency Management Agency (FEMA).

Not everyone understands the need for a separate flood policy. In fact, research shows that there's a common misconception that homeowners insurance covers flood damage when, in fact, it typically doesn't. In a March 2013 survey commissioned by Allstate, 44 percent of Americans said they believed they were covered for weather-related floods, when, in fact, only 15 percent reported having purchased a flood insurance policy through the NFIP.

"Some people believe flood is part of their standard homeowners policy and, sadly, don't realize they need a separate flood policy until it's too late," said Mark Green, a senior vice president at Allstate.

Flood Insurance is Required in 'High-Risk' Areas

Costs for flood insurance will vary depending on how much coverage you buy, what the policy covers (does it just cover the structure? the contents of your home?) and your property's flood risk. The NFIP offers flood risk maps that can help you identify your community's level of risk.

If your home falls in a high-risk flood area and you carry a mortgage from a federally regulated or insured lender, your lender is legally mandated to require flood insurance on your property. Typically, that's not the case if your home falls in a moderate-to-low risk area; however, a lender may require you to hold flood insurance at any time—even if the company is not legally mandated to do so, according to Floodsmart.gov.

To obtain NFIP insurance, your community must participate in the program. Most do, but not every municipality across the country does. Here is where you can find out whether your community is one of the more than 21,8000 that do take part (click on your state, and then search through the alphabetical listing of communities to see if yours is on the list).

Other Ways to Help Protect Against Floods

There are also other things you can do to help protect your property and loved ones against a flood. Here are some tips from the Insurance Institute for Business and Home Safety (IBHS) to keep in mind:

  • Make sure the grading, or slope, of your yard directs water away from your home.
  • Install a sump pump with a battery-backup system (and test it every year, IBHS says).
  • Keep drains, downspouts and gutters free of debris, and extend downspouts away from the building.
  • Have a licensed electrician raise electrical outlets at least 12 inches above the expected flood levels for your area.
  • Develop a family emergency plan with an evacuation kit that includes important documents in case you're forced to leave your home.

While flood insurance is offered through the NFIP, policies are sold and administered by private insurance companies like Allstate. Find an agent near you to talk about your flood insurance needs. Because most policies don't take effect until 30 days after signing, don't wait until the storm season is upon you to purchase yours.

Related Resources:

Subject to National Flood Insurance Program terms, conditions and availability. The National Flood Insurance Program (NFIP) is managed by the Federal Emergency Management Agency (FEMA), a component of the U.S. Department of Homeland Security (DHS). NFIP flood policies are underwritten by the federal government and sold and administered by private insurance companies like Allstate through the Write Your Own (WYO) Program.

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