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Most homeowners and renters policies won’t cover flood damage, so those people at risk need separate flood insurance.
Flood insurance covers damage from heavy rainfall, overflowing bodies of water and other instances of excess water.
Flood insurance pays to repair the structure of your home and replace damaged personal belongings.
Many Americans don’t need to wonder whether they must have flood insurance; if you live in a high-risk area, you may not be able to get a mortgage without it. But even if flood insurance isn’t required for your property, you may still want to buy it.
Most home insurance policies don’t cover flood damage, which can amount to tens of thousands of dollars even if there's just an inch or two of water. Flood policies in moderate- to low-risk areas could cost less than your monthly cell phone bill, so if you can afford the coverage, it may be worth it.
What is flood insurance?
Flood insurance is a type of property insurance that covers specific types of water damage to your home. The nation’s biggest flood insurance provider, the National Flood Insurance Program, defines flooding as “an excess of water on land that is normally dry.” Flood insurance covers scenarios such as:
A river, lake or bay that overflows its banks.
A hurricane storm surge.
A heavy downpour that accumulates faster than it can drain.
Most homeowners, condo, renters or mobile home insurance policies do not cover flood damage. So if your home is at risk of flooding, you’ll usually need to buy this coverage separately.
What does flood insurance cover?
Two types of flood insurance are available from the NFIP, each with a separate deductible: building and contents.
Building coverage is insurance for the structure of your home. (It’s similar to dwelling coverage on a homeowners policy.) It pays for flood damage to things like:
Electrical and plumbing systems.
Built-in appliances and cabinets.
Permanently installed carpets.
Fuel and well water tanks.
The NFIP offers building coverage up to $250,000.
Like personal property coverage on a homeowners or renters policy, contents coverage pays for damage to your belongings. On an NFIP policy, this includes:
Original artwork (up to $2,500).
Washers, dryers and microwaves.
Portable air conditioners.
The NFIP’s contents coverage is provided on an “actual cash value” basis. This means that if you file a flood insurance claim, your payout will be based on an estimate of what your belongings were worth at the time of the flood.
Here’s an example: If floodwaters damage your 15-year-old recliner beyond repair, your policy will pay enough to buy a used recliner of similar age and quality — not enough for a new one.
NFIP policies offer up to $100,000 of contents coverage.
Flood insurance coverage beyond the NFIP
You may be able to get broader coverage and higher limits by purchasing flood insurance through companies that don’t work with the NFIP. For example, Neptune offers building coverage up to $4 million and contents coverage up to $500,000. Learn more about private flood insurance.
What doesn’t flood insurance cover?
The standard NFIP policy won’t pay for certain expenses, including:
Some water damage
The NFIP pays for damage only when naturally occurring flooding affects at least 2 acres and a minimum of two properties. That means it won’t cover scenarios such as an overflowing bathtub that floods your bathroom. (Your homeowners insurance may cover that issue and others.)
Damage to certain parts of your home
The NFIP won’t pay for flood damage to any of the following:
Personal belongings in your basement.
Living expenses if you’re displaced
If you need to move into a hotel or rent an apartment while contractors repair your home after a flood, you’ll have to pay those expenses yourself.
NFIP insurance won’t cover cars or other “self-propelled vehicles,” but if you’ve got comprehensive insurance on your auto policy, it should pay for flood damage.
Private insurers tend to offer more coverage options and fewer exclusions. For instance, Neptune and Aon Edge can cover some expenses if you need to move out of your home during repairs. They also pay for swimming pool repairs or cleanup.
» MORE: What does flood insurance cost?
Do I need flood insurance?
Homeowners in high-risk flood zones must buy flood insurance to get a federally backed mortgage. If the federal government has given you grants or other flood assistance, you must have flood insurance to be eligible for any future federal disaster aid.
If having flood insurance isn’t a condition of your mortgage, you don’t have to carry it. However, even a minimal amount of flooding can have disastrous financial consequences.
One foot of water could cause more than $29,000 in damage to a 1,000-square-foot home. You can use the NFIP’s tool to estimate how much a flood may cost you based on the size of your home.
The NFIP’s average claim payout has been more than $36,000 through June in fiscal year 2022, according to the NFIP. About 40% of NFIP claims from 2015 to 2019 came from policyholders outside high-risk flood areas.
If you live in a low-risk zone, you may want to weigh the cost of coverage against the likelihood of having to file a claim. If your area has never had serious damage and you’re thinking of skipping flood insurance, consider setting aside money for any possible repairs.
Some states, including Mississippi and South Carolina, also allow residents to place their emergency funds in Catastrophe Savings Accounts that are exempt from state income tax. Federal taxes still apply, and you could face a penalty tax from the state if you withdraw money for purposes other than disaster repairs.
How much flood insurance do I need?
The coverage needed depends on the size and structure of your house and the value of your possessions. For example, you may need more coverage if you live in a sprawling one-floor ranch than if your home has two stories and half your possessions are elevated beyond the reach of most floods.
An insurance agent can help you figure out how much building coverage you need, while a home inventory is a good way to assess the value of your belongings.
If the NFIP doesn’t provide enough coverage, ask your insurance agent about excess flood insurance to fill the gap. Excess insurance is generally available from private companies such as Wright and SWBC.
Alternatively, you can skip the NFIP and look for private flood insurance with higher limits.
How to get flood insurance
You have several options for buying flood insurance. The NFIP works with more than 50 insurers to sell its policies, so you may be able to get flood insurance from the same company that offers your auto or homeowners coverage.
You must live in one of the 24,000-plus communities that participate in the program to buy an NFIP policy. (Here's a list of participating communities.)
If NFIP insurance isn’t available in your area, you’ll have to go through a private company that sells flood insurance policies. Even if you do have access to NFIP insurance, you may be able to get lower premiums from a private insurer, so it’s smart to gather quotes before committing to a policy.
Don’t wait until a hurricane is barreling down on your home to get covered. There’s typically a waiting period between when you purchase flood insurance and when the coverage takes effect. For NFIP policies, the waiting period is usually 30 days, while other policies can have shorter periods of 10 to 14 days.
You may want to give your insurer an elevation certificate to see if it may help lower your premium. This document includes the lowest floor elevation of your home, which the insurer will use to determine your home’s flood risk. The Federal Emergency Management Agency previously required elevation certificates for some property owners to get coverage, but this is no longer the case under Risk Rating 2.0.
You can get an elevation certificate from your local floodplain manager or hire a land surveyor or engineer to complete one for you.