Despite the frequency of these events, flood damage isn’t covered under most homeowner’s insurance policies. With just one inch of water in a home being able to cause ten of thousands of dollars in damage, purchasing a separate flood insurance policy can be a small price to pay for invaluable peace of mind.
Why buy flood insurance?
Under standard homeowner’s insurance coverage, damage from flooding is not typically covered. Having flood insurance can be the difference between recovery and financial devastation.
Regardless of whether you live in a high-risk or low-risk flood zone, no home is completely safe from potential flooding. Flooding can happen anywhere, for a variety of reasons, including broken water mains, summer storms and melting snow. Purchasing flood insurance can help mitigate this uncertainty and save you hundreds of thousands of dollars in damages.
Am I required to have flood insurance?
If you live in a high-risk flood area and you have a mortgage, you’re most likely required to also have flood insurance. You may not be required to have flood insurance if your property falls in a moderate-to-low risk area, however, a lender can require it even if they are not legally mandated to do so.
Even if you’re not required to have it, flood insurance outside of flood-prone areas can be surprisingly affordable. It’s a common misconception that low-risk flood zones are “no risk” flood zones, but flooding can happen anywhere at any time—scenarios like melting snow, poor drainage systems, broken water mains can all result in potential flooding.
What does flood insurance cover?
Purchasing flood insurance will help cover damage to your property and costs associated with lost or damaged belongings. Electrical and plumbing systems, appliances, furniture, flooring and certain valuables are all home features covered by flood insurance.
It’s also important to understand what isn’t covered by flood insurance. Flood insurance does not cover currency and paper valuables (such as stock certificates), outdoor property and furnishings, vehicles or temporary housing expenses.
Types of Flood Insurance
There are two types of flood insurance, building coverage and contents coverage. Building coverage covers the physical structure of your home and its foundation, while contents coverage covers personal items like clothing, furniture and electronics.
National Flood Insurance Program (NFIP)
The National Flood Insurance Program provides coverage through the Federal Emergency Management Agency for the structure of the home and for personal possessions. As long as your community participates in the program, you should be eligible for NFIP coverage.
NFIP coverage comes in two forms: building property coverage and personal property coverage. Building property coverage provides the replacement costs for the structure of your home and personal property coverage provides the actual cash value coverage for your personal belongings.
National Flood Insurance Program (NFIP) Rate Updates
Beginning in October of 2021, FEMA updated their methodology in an attempt to provide more equitable insurance rates based on information regarding risk. These new premiums were meant to better reflect flood risk for individual properties. All policies renewing on or after April 1, 2022 are subject to the new rating methodology.
These changes were meant to be more transparent; in the past, flood insurance policyholders would see annual rate increases without seeing their full risk rate. Rate increases are capped at 18%2 per year for those policyholders whose risk is set to increase.
Private Flood Insurance
Flood insurance sold through private insurers is a viable alternative to relying on NFIP coverage. Although this option may not be available in every state, flooding policies sold through private insurers are similar to NFIP policies but can often offer higher levels of coverage.
SelectQuote can help you make informed decisions about flood insurance for your home.
As you learn more about your options for flood insurance, it may also be a good time to consider your overall homeowners insurance needs. At SelectQuote, we’re here to make shopping for coverage easy. In addition, we can help you navigate the flood insurance space. We can walk you through the decision to purchase flood insurance, including whether private insurance or NFIP coverage makes sense based on recently updated risk ratings. We can help you find a flood insurance company in your area that partners with FEMA to offer NFIP coverage.
In just minutes, we can compare rates and coverage from some of the most trusted carriers and we’ll take the time to learn more about what you hope to protect, figure out where there are gaps in your insurance and find the coverage you need at a price that fits your budget.
1 https://www.ncei.noaa.gov/access/billions/summary-stats/US/1980-2022/
2 https://www.fema.gov/press-release/20210924/fema-offers-more-equitable-flood-insurance-rates-beginning-oct-1
