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What Is Flood Insurance?

Katy McWhirter

Flood insurance is a type of property and homeowners insurance specifically designed for dwellings in flood plains, near bodies of water or in other areas that hold a higher likelihood of water-caused damages. Homeowners in some parts of the country are required to carry flood insurance in addition to their home insurance, while others choose to purchase it in case of disaster. Finding the best home insurance for your needs means evaluating where you live and whether or not an additional flood policy could help you in the event of a natural disaster or other flooding event.

Related: Government and Private Flood Insurance Options

Do You Need Flood Insurance?

Whether or not you need flood insurance depends on where you live, but according to the Federal Emergency Management Agency (FEMA), any structure located where it rains could encounter flooding — even those in areas considered low or moderate risk.

Between 1996–2019, 99% of counties in the U.S. were impacted by floods, with the average claim paid out by the National Flood Insurance Program totaling $52,000 in 2019. Research shows that an inch of floodwater can result in up to $25,000 in damages.

FEMA provides a searchable map of historical flood impact for each state, making it easier for you to know your risks and decide what's best for you, your family and your property.

What Does Flood Insurance Cover?

Flood insurance can cover a variety of costly expenses related to both buildings and personal property in the event of a flood. Coverage can vary by insurer, making it essential to ask for an itemized list prior to taking out a policy. According to Consumer Reports, common coverages include:

  • Electrical, plumbing, heating and air, solar energy equipment, pumps, cisterns and any other systems considered essential
  • Appliances such as refrigerators, ranges, dishwashers, washing machines and dryers, freezers and window air conditioning units
  • Carpeting, wooden floors, blinds and curtains
  • Permanently installed furniture, including kitchen cabinets, bookcases and paneling
  • Foundation walls, staircases or any other anchoring systems
  • Personal property, including furniture, clothing and electronics
  • Specific valuables, such as art or designer clothing

Related: Is Your Car Insurance Hurricane Ready?

What Is Not Covered By Flood Insurance?

Flood insurance coverage protects buildings and many valuable systems, tools and personal belongings in a home affected by flooding but leaves out other expenses. Understanding what these are can help you prepare for a flood, protect items beforehand and know your rights. Consumer Reports notes that flood insurance typically does not cover the following expenses:

  • Damages related to mold, mildew or moisture due to upkeep negligence on the part of the property owner
  • Damage caused by earth movement, even if a flood caused it
  • Temporary housing while the original structure is repaired or unlivable
  • Loss of access to the property
  • Any financial damage caused by lack of access to a business property
  • Items outside the insured property, including plants, septic systems, decks, patios, fences, hot tubs or swimming pools
  • Valuable papers, currency or precious metals
  • Most cars

Related: How To File An Auto Insurance Claim After A Flood

How Does the National Flood Insurance Program Work?

Created by Congress in 1968, the National Flood Insurance Program (NFIP) operates through FEMA to help individuals and communities avoid financial repercussions and build back more quickly after a flood event. The program brings together a network of 60 insurance companies. It provides insurance to any property owner, renter or business located in one of the 23,000 communities currently participating in the program.

When looking into FEMA flood insurance, you can choose to cover only the building, only its contents or both. Further options include coverage for only elevated areas such as your main living space or unelevated spaces such as the basement or crawl spaces.

To learn whether NFIP operates in your area or to get a quote, you can reach out to a local insurance agent and ask whether your community takes part. FEMA also provides the community status book, a searchable database of participating counties.

Related: What Does The NFIP Cover?

When Can You Purchase Flood Insurance?

If flood insurance is required by your mortgage company, you will need to sign up for it at about the same time you sign your closing documents. If you decide you need flood insurance after the purchase of your home, you should purchase a policy as soon as possible. Some insurance companies, including the NFIP, have a 30-day waiting period between signing up and the policy going into effect. Because of this, it's essential to purchase your insurance earlier than you think you might need it. If a federally backed lender requires it or there is a change to the flood map, the coverage kicks in immediately.

How Much Does Flood Insurance Cost?

A 2019 report from FEMA found that annual flood insurance policies averaged $700 in 2019. Your flood insurance cost will depend on several factors, including the valuation of your property, where it is located, how much coverage you need and your flood insurance deductible amount. Factors such as whether you ensure only the structure, your contents or both affect your premium, as does whether you seek elevated or below-ground coverage. As with other insurance types, it's essential to check with several carriers and compare quotes to find the best rate.


How to File a Flood Insurance Claim

Individuals who insure their property through the NFIP should contact their agent or insurer to begin the claims process, as should those who went with a private option. It may be possible to receive advance payments for some of the damages to help you address pressing issues before the rest of your funding arrives.

As part of the claims process, an insurance adjuster will visit your property to assess the damage. Remember to take photos or videos of any damaged areas before removing them, as this could affect your funding.

About The Author

Katy McWhirter is a writer living in Louisville, Kentucky who specializes in topics such as education, personal finance and travel.