Do I Need Flood Insurance?

How Does Flood Insurance Work?

Flood insurance works like a regular homeowners insurance policy: If a flood occurs, you file an insurance claim, and your flood insurance policy will pay for damage to your home's structure and your belongings up to the limits of your coverage.

When you file a flood claim, you'll be responsible for a deductible, which is subtracted from the insurance claim payout. Flood insurance deductibles may be a flat dollar amount or a percentage of your home's insured value. There's usually one deductible for your home's structure and a separate deductible for your personal belongings.

You can buy flood insurance through the National Flood Insurance Program (NFIP) administered by the Federal Emergency Management Agency (FEMA). NFIP flood insurance is available to homeowners in most locations and covers the following:

Damage to your home's structure (up to $250,000), including:

• Electrical and plumbing systems
• Furnace and water heater
• Built-in kitchen appliances
• Permanently installed carpet, cabinets, paneling, bookcases and blinds
• Foundation walls and staircases
• Detached garages

Damage to personal belongings (up to $100,000), including:

• Clothes, furniture and electronics
• Washer/dryer
• Microwaves
• Window or portable air conditioners
• Valuable items like art or furs (up to $2,500)

Unlike standard homeowners insurance, flood insurance typically doesn't cover the cost of living elsewhere while repairs are made to your home.

Learn more: What Does Flood Insurance Cover?

Do I Need Flood Insurance?

Whether you need flood insurance will depend on your home's flood risk and your mortgage lender's policies. If you live in an area at high risk of flooding and have a federally backed mortgage, your lender may require you to carry flood insurance. If you live in a moderate- or low-risk area, the decision is usually up to you. You can use FEMA's flood map to check your home's risk zone.

If your lender doesn't require flood insurance, whether to buy it depends on your budget, your risk tolerance and other factors. When making your decision, consider your home's elevation, the nearest body of water and whether your property or neighborhood has flooded in the past.

Since 40% of flood claims come from homeowners in low- or moderate-risk zones, according to FEMA, flood insurance could wind up being a worthwhile purchase no matter where you live. FEMA estimates 1 inch of water can cause over $25,000 in damage to your home. Without flood insurance, you could end up paying for expensive repairs out of pocket.

You may not be able to count on federal disaster assistance to help after a flood, either. FEMA assistance is available only if the president declares a disaster, which rarely happens in the case of floods. In addition, FEMA assistance is usually a loan you must repay with interest. Insurance payouts don't have to be repaid.

Learn more: Does Home Insurance Cover Natural Disasters?

How Much Does Flood Insurance Cost?

The median cost of NFIP flood insurance is $1,290 per year for a single-family home with a replacement cost value of $425,297, according to 2023 FEMA data—the most recent available. The cost of your flood insurance policy will depend on many factors, including your home's flood risk, the amount and type of coverage you buy, your deductible as well as your home's design and age. For example, you'll typically pay more if you live in a high-risk zone, and less if you've taken steps to reduce your home's flood risk.

You can protect your home against flood damage—and potentially lower your flood insurance premiums—by taking the following steps.

• Elevate your utilities. Moving utilities, such as your water heater and heating and cooling systems, from basements or ground-floor locations to upstairs closets or other elevated locations could help protect them from a flood.
• Install flood openings. Installing approved flood openings (also called flood vents) in basements or crawl spaces can help reduce pressure on walls during a flood and minimize structural damage. Flood openings must meet NFIP requirements to qualify you for cheaper rates.
• Fill in your basement. For certain people in high-risk zones, filling in your basement or other underground space (such as a crawl space that's below ground on all sides) could help reduce your risk of damage and save you money on flood insurance.
• Increase your deductible. While raising your deductible means you shoulder more of the out-of-pocket cost of flood damage, doing so typically lowers your monthly premium. Just be sure you can afford to pay the higher deductible if your property is damaged.
• See if you qualify for a discount. If you live in one of the roughly 1,500 communities that participate in FEMA's Community Rating System (CRS), you may be eligible for premium discounts ranging from 5% to 45%. Visit FEMA's website to see if your community is eligible.

Learn more: How Much Homeowners Insurance Do You Need?

How to Get Flood Insurance

To get flood insurance, start by contacting your current homeowners insurance provider. Many home insurance companies offer flood insurance as standalone or add-on coverage. You can also visit the NFIP website to get a quote online or find insurance companies that sell NFIP flood insurance. All NFIP participating insurers charge the same rates, so you won't have to compare prices if you go this route.

NFIP flood insurance is capped at $250,000 for your home's structure and $100,000 for its contents. If that's not enough to protect your home, you can buy additional coverage from private insurance carriers. Carriers selling flood insurance outside the NFIP plan may have different rates, so be sure to shop around with several providers. Comparing rates and coverage options will help you get the best deal possible.

Keep in mind there's typically a 30-day waiting period for NFIP flood insurance to become effective, unless the purchase is required by your mortgage lender or is related to changes to a community flood map.

Learn more: How to Buy Home Insurance

The Bottom Line

A natural disaster can devastate your finances if you don't have enough insurance coverage to cover the cost of rebuilding and repairs. Buying flood insurance could be a relatively cost-effective way to protect both your home and your budget.

Taking steps to reduce your risk could reduce the cost of flood insurance. Maintaining good credit might help you save too. Most states allow insurance companies to consider your credit-based insurance score when setting your rates. Although these scores differ from regular credit scores, they're based on similar data. Actions that may help boost your regular credit score, like paying bills on time and reducing debt, could also increase your credit-based insurance score, which could mean paying less for flood insurance.