Flooding may seem unlikely to impact your home, but the reality is far more concerning. According to the Federal Emergency Management Agency (FEMA), floods are involved in 90% of all presidentially declared natural disasters in the U.S.
Unfortunately, standard homeowners, condo, or renters insurance typically does not cover flood damage. This leaves your property vulnerable to significant financial loss in the event of a flood.
Even if flood insurance is not mandated for your area, it’s worth considering as an essential safeguard to protect your home and belongings.
With the increasing frequency of extreme weather events, flood insurance could provide vital peace of mind and financial security when you need it most.
Read More: Is Flood Insurance Necessary for You?
Why You Should Consider Flood Insurance
Here are three important reasons to consider purchasing flood insurance for your home:
Home Insurance Doesn’t Cover Flood Damage
Many homeowners and renters mistakenly believe their insurance covers flood damage. However, standard policies typically exclude this type of damage, which differs from common water damage caused by burst pipes or leaks.
In the insurance industry, flooding is defined as excess water from sources like overflowing rivers, storm surges, or heavy rainfall that can’t drain quickly enough. To protect against these risks, you’ll need separate flood insurance coverage.
Government Assistance May Be Insufficient
Some individuals skip flood insurance, assuming they can rely on government aid if disaster strikes. While FEMA provides grants for flood victims in declared disaster areas, the maximum grant for home rebuilding is only $43,600, with most payouts being much lower.
In contrast, federal flood insurance can cover up to $250,000 for structural repairs and $100,000 for personal belongings. Although you may also qualify for a low-interest loan from the Small Business Administration, loans must be repaid, unlike flood insurance payouts.
You May Be at Greater Risk Than You Think
While flood insurance is often required in FEMA-designated “special flood hazard areas” (SFHAs), it’s important to note that nearly 40% of flood insurance claims come from low- or moderate-risk areas. Even if you don’t live in an SFHA, your home could still be vulnerable.
For example, when Hurricane Helene struck western North Carolina in 2024, less than 1% of residents in the hard-hit Buncombe County had federal flood insurance, according to the Insurance Information Institute.
How to Assess Your Flood Risk
FEMA’s flood maps are a valuable resource, but they may not always reflect the current risk of flooding. Historically, FEMA has focused on coastal and river flooding, which means its maps may underestimate the risk posed by heavy rainfall, a concern that’s growing with climate change.
As the atmosphere warms and can hold more moisture, many scientists predict an increase in rainfall-driven flooding events.To address this gap, private companies and nonprofit organizations have developed alternative flood risk models that take climate change into account.
For example, First Street, a private benefit corporation, provides flood risk estimates on a scale of 1 to 10. Climate Check offers a similar service, rating flood risk on a scale of 1 to 100.
Additionally, Climate Central, a nonprofit focused on climate change, provides a Coastal Risk Finder tool that allows you to project future flood risks in coastal communities across various scenarios.It’s important to remember that these models are not definitive predictions but rather estimations of potential risks.
Matthew Eby, founder and CEO of First Street, emphasizes that while these online tools offer valuable insights, they are not foolproof. For a more thorough assessment, Eby recommends consulting with your community’s floodplain manager.
Your state or local government can help you locate this resource for more personalized information.
How to Obtain Flood Insurance
The majority of homeowners purchase flood insurance through the National Flood Insurance Program (NFIP), which is managed by FEMA and offered by various insurers, including Allstate and Farmers. A comprehensive list of participating providers can be found on the NFIP website.
In some areas, you may also have the option to explore private flood insurance providers, potentially offering more tailored coverage or more competitive rates.
To ensure you secure the best policy for your needs, it’s advisable to consult with a local insurance agent who can guide you in comparing different options and selecting the most suitable coverage.
Alternatives to Flood Insurance
Flood insurance may not be necessary for everyone. If you live in a lower-risk area, it’s worth considering the cost of coverage relative to the likelihood of needing to file a claim.
Self-Insurance
If your area has rarely experienced significant flooding and you’re contemplating skipping flood insurance, consider setting aside funds for potential repairs. One option is to open a high-yield savings account dedicated to covering flood-related expenses or other emergencies.
In some states, including Mississippi, Alabama, and South Carolina, residents can deposit emergency funds into Catastrophe Savings Accounts. These accounts can be used to fund repairs after a flood, and the contributions and interest earned are exempt from state income taxes.
However, federal income taxes may still apply, and penalties could be imposed if the funds are spent on anything other than disaster-related repairs.
Lower Your Flood Risk
If flood insurance is unaffordable or you’re seeking additional ways to mitigate risk, consider the following strategies:
Elevate Expensive Items:
Eby suggests raising valuable appliances, such as heating and air-conditioning units, on platforms. This is typically more cost-effective than elevating your entire home.
Protect Your Basement:
Waterproofing your basement’s walls can help prevent floodwaters from entering. Installing a sump pump can assist in removing any water that does get in.
Install Flood Vents:
Flood vents in your foundation can allow water to flow in and out, reducing the potential for structural damage.
Use Sandbags:
Placing sandbags over plastic sheeting on doors can provide a barrier to floodwaters. These sandbags are often available for purchase, or local governments may offer them free of charge during storm events.
Explore Community Solutions: Flood risks that originate beyond your property may require community-level solutions.
Eby recommends collaborating with neighbors and local authorities to invest in flood-prevention measures such as seawalls, levees, or upgraded drainage systems. As Eby states, “The property is only as valuable as the community it’s a part of.”
Frequently Asked Questions (FAQs)
What is flood insurance?
Flood insurance provides financial protection against damage caused by flooding, which is typically not covered by standard homeowners, renters, or condo insurance. It helps cover the cost of repairs to your home and replacement of personal property damaged by floodwaters.
Do I need flood insurance?
While flood insurance is essential for homeowners in flood-prone areas, it is also worth considering for those in low- or moderate-risk zones. Flooding can occur unexpectedly, and standard insurance policies often do not cover flood damage.
What does flood insurance cover?
Flood insurance generally covers damage to the structure of your home and personal property inside. It includes repairs to the building and replacement of items like furniture, appliances, and electronics. However, it does not cover temporary living expenses or outdoor structures like fences.
How can I buy flood insurance?
Most flood insurance policies are sold through the National Flood Insurance Program (NFIP), managed by FEMA, and are offered by insurance providers like Allstate and Farmers. You can also explore private flood insurance providers to find coverage that suits your needs.
How much does flood insurance cost?
The cost of flood insurance depends on several factors, including your location, the value of your property, and the level of coverage you need. On average, flood insurance can range from $400 to $2,000 annually, but costs can be higher depending on your risk zone.
Will my homeowner’s insurance cover flood damage?
No, most standard homeowners and renters insurance policies do not cover flood damage. You will need to purchase a separate flood insurance policy to be protected against flood-related losses.
Conclusion
Flood insurance is a crucial safeguard for homeowners, renters, and property owners, protecting against the financial devastation caused by flooding—an event that can occur even in low-risk areas. While not everyone is required to carry flood insurance, it’s important to assess your risk, understand what your current insurance covers, and consider whether flood insurance is a wise investment for your peace of mind and financial security.