Do I need flood insurance?
Last updated: June 2023
You may have heard about flood insurance and wondered if you really need it. To help decide whether flood insurance is right for you, it's important to understand a bit about both floods and insurance.
Floods are the No. 1 natural disaster in the United States, according to the Federal Emergency Management Agency (FEMA). Even a few inches of water can cause costly damage to your home and its contents, FEMA says.
Many conditions can cause flooding: 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.
Here are some things to consider as you determine whether you should buy a flood insurance policy.
Homeowners insurance does not typically cover floods
It's important to know that a standard homeowners insurance policy typically doesn't cover flood damage. And because floods can occur anywhere, you should consider purchasing a separate flood insurance policy. Flood insurance is issued through the National Flood Insurance Program (NFIP), which is managed by FEMA, or may be sold by some private insurers. Your insurance provider can help you purchase flood insurance.
How much does flood insurance cost?
The price of flood insurance is based on a few factors, including your property's flood risk, what the policy covers and how much coverage you buy. You can purchase separate coverage (generally up to $250,000) for the structure of your home and for your belongings (up to $100,000), according to FloodSmart.gov. The types of coverage you purchase and limits you set help determine the price of your policy.
When is flood insurance required?
If your home falls in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, your lender is legally mandated to require you to have flood insurance, FEMA says. 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 FEMA.
To obtain an NFIP flood insurance policy, your community must participate in the program. Most communities participate, but not every municipality across the country does. You can check whether your community participates in the NFIP Community Status Book (click on your state, and then search through the alphabetical listing of communities to see if yours is on the list).
While flood insurance is offered through the NFIP, policies are sold and administered by private insurance companies. Most policies don't take effect until 30 days after signing, so it's a good idea to consider purchasing coverage before storm season is upon you. Talk to your insurance provider about your flood insurance needs.