Do You Need Flood Insurance?

If you live somewhere that FEMA has designated a Special Flood Hazard Area and you have a mortgage, your lender probably already requires you to have flood insurance.

But whether or not you have a mortgage, you should know if—and to what extent—your house is at risk of flooding. Start by checking FEMA’s Flood Map Service Center. Type in your address and look for any shading on the map. The color coding can vary, but high-risk zones are often shaded in blue, moderate-risk areas are often in orange, and low-risk areas are typically unshaded. High-risk areas, also known as Special Flood Hazard Areas, are those with a 1 percent or higher chance of flooding each year. 

Don’t stop there, though, because FEMA’s maps are years out of date and sometimes do not incorporate major recent developments. So your next stop should be First Street’s climate‑risk modeling tool, which provides flood, fire, wind, air, and heat “risk factor” scores. Again, you’ll enter your address at the top of the page and you will see a “flood factor” score on a scale of 1 to 10 based on the projected likelihood and depth of flooding—the higher the score, the higher the risk. It’s free to see the numerical factor scores, and you can start a free seven-day trial (which can be canceled during that time without a charge) to get more detailed information and risk assessments about your property. A First Street representative told CR that scores of 5 and above typically indicate that you should seriously consider flood insurance. 

Keep in mind that about one-third of NFIP claims come from outside of high-risk zones. So even if the data you find indicate that you don’t live in an especially vulnerable location, experts say you should consider getting flood insurance if your home is: 

In an area impacted by wildfires: These fires can significantly change terrains, with burned vegetation and charred soil limiting water absorption and leading to flooding when it rains. The flood risk sticks around for up to five years after a wildfire until the vegetation is fully restored. 

Next to someone with an aboveground pool: Damage from your neighbor’s pool collapsing could be covered under flood insurance. 

In an area where the ground freezes: Frozen ground can cause flooding because snowmelt and rain runoff isn’t able to be absorbed. 

In a low-lying area: Water usually flows downhill, causing flooding.

In an area subject to “urban runoff": Many urban areas lack natural landscaping or other permeable surfaces that can soak up rainwater and melting snow, so water can flow downhill, collect in hard-to-predict locations, and cause flooding. 

An independent insurance broker—one who doesn’t work for a particular insurance company—can also help you decide whether you need flood insurance, as well as what your options are. (More on independent brokers and agents is below.) 

Flood insurance generally covers damage to:
• Electrical and plumbing systems
• Furnaces and water heaters
• Appliances (refrigerators, stoves, dishwashers, washers and dryers, window air conditioners, microwaves)
• Permanently installed cabinets, panels, bookcases, and some carpeting, but generally not if they’re in a basement (see below)
• Window blinds and curtains
• Foundation walls, anchorage systems, and staircases
• Detached garages
• Fuel tanks, well water tanks and pumps, and solar energy equipment.

NFIP policies cover up to $250,000 of flood damage to these parts of your home. You can also purchase a separate flood policy to cover up to $100,000 of damage to the other contents of your home, including clothing and furniture. (Bach says that you may need to specifically ask for “contents coverage,” which is not typically included in standard flood policies.) 

Flood insurance typically will not pay for:
• Temporary housing and other living expenses incurred while your property is being repaired
• Damaged personal property that was kept in basements
• Damage caused by moisture, mildew, and mold that the property owner could have avoided via regular maintenance
• Damage to motor vehicles
• Parts of your property outside your house, such as landscaping, swimming pools, fences, decks, patios, and septic tanks.

Even for structures and possessions that are covered, flood insurance generally won’t cover all losses. For one thing, NFIP policies frequently come with deductibles of between $1,000 and $10,000—meaning that coverage doesn’t kick in until your losses exceed that amount. “You may need to cover thousands of dollars out of pocket for smaller floods,” says Loretta Worters, a spokesperson for the Insurance Information Institute.

In addition, it’s important to know whether your policy provides “actual cash value” (ACV) coverage—which pays the cost of replacing a given piece of property minus depreciation, not the current cost to replace it—or the more comprehensive “replacement cost value” (RCV) coverage, which does not deduct depreciation. For the home structure itself, NFIP automatically provides replacement cost value coverage if the property is a single-family principal residence insured for at least 80 percent of its replacement cost. However, contents coverage is generally limited to the depreciated amount. 

Also consider the upper limits of your coverage. If your home could sustain damage beyond the $250,000 NFIP policy limit, you may want to investigate private flood insurance, which often offers higher limit policies or “excess” coverage that complements NFIP policies. “A combination of NFIP, private flood policies, and excess policies might be needed,” Worters says.

If you live in an area that’s not considered high-risk, the cost of flood insurance is often modest. According to NFIP data, 37 percent of policies nationwide cost less than $1,000 per year and another 32 percent cost between $1,000 and $2,000 per year. Extremely high-risk coastal properties can run $4,000 per year or more—but homeowners in high-risk areas should note that federal law caps your annual increase at 18 percent.

Head to FEMA’s FloodSmart website to get a quote in just a few minutes with information such as your address, age of your home, square footage, and building type. 

Unlike homeowners insurance, which is underwritten and sold by private companies, most flood insurance policies are managed and underwritten by FEMA via the National Flood Insurance Program (NFIP) and sold and serviced by private insurance companies. NFIP policies make up the majority of flood insurance policies in the U.S. You can get NFIP flood insurance if you live in a participating community, including in condos and townhouses, and most communities in the U.S. participate. 

You can purchase flood insurance through your existing homeowners insurance agent. But if you don’t already have a trusted insurance broker, experts recommend finding an “independent” broker, meaning one who works with multiple carriers—both NFIP and private insurers—and can therefore compare coverage options and pricing. 

Search for independent agents at trustedchoice.com. 

Bach suggests finding a broker who can get you both an NFIP quote and quotes from private insurers. Worters recommends verifying that the broker has specific flood insurance experience, not just general homeowners insurance, and asking whether they handle claims or provide guidance during loss events because experience in claims support is critical.