Flooding is the most frequent and expensive natural disaster in the United States. Yet, flood peril is not typically covered through most homeowners and renter's insurance policies.
With more than 20 percent of the National Flood Insurance Program's (NFIP) claims coming from outside high-risk flood areas, those who live in areas with low-to-moderate flooding risk should understand their risk and consider flood insurance. The FEMA flood map service allows you to determine your flood risk. Risk levels are divided into three categories:
High-risk areas have at least a 1 percent chance of flooding each year. Homeowners in these areas with mortgages from federally regulated or insured lenders are required to buy flood insurance.
Moderate to low-risk areas
Moderate to low-risk areas have less than a 1 percent chance of flooding each year, but there is still a possibility the area could flood. Flood coverage isn't required in these areas, but it is recommended. Some mortgage lenders still require you to have flood insurance in non-high-risk areas.
Undetermined risk areas
Undetermined risk areas are areas where flood-hazard analysis has yet to be conducted, but risk still exists.
Myths vs. Realities
Know the truth about flood insurance.
The risks associated with flooding are real, and it affects more people than many realize. Flooding can happen to anyone at anytime anywhere it rains. These realities will clear up some misconceptions about flooding and flood insurance and help you better understand your flood risk and policy options.
MYTH: Only homeowners can purchase flood insurance.
Reality Most homeowners, condo unit owners, renters and businesses in National Flood Insurance Program (NFIP) participating communities can purchase flood insurance. To find out if your community participates, go to http://www.floodsmart.gov or contact a community official or insurance agent.
MYTH: If you are not in a high-risk area, you don't need flood insurance.
Reality While mortgage companies typically do not require flood insurance for homes outside high-risk areas, more than 20 percent of the NFIP's claims come from outside mapped flood zones.
MYTH: My homeowners insurance covers me against floods.
Reality Most homeowners and business insurance policies do not cover flooding.
MYTH: All flood insurance is the same price.
Reality The price for flood insurance varies by provider and proximity to flood zones.
MYTH: You can't buy flood insurance if your property flooded before.
Reality If your community participates in the NFIP, you are still eligible to purchase a flood insurance policy, regardless of flood history.
MYTH: You can buy flood insurance immediately before a flood and be covered.
Reality While you can purchase flood insurance from the National Flood Insurance Program at any time, there is usually a 30-day waiting period before the policy takes effect. Your new policy will only cover losses that occurred after the policy takes effect. For more information, visit the Floodsmart website.
MYTH: I live in a 100-year floodplain, so there is very little chance of flooding.
Reality During a 30-year mortgage, you are 27 times more likely to experience a flood than have a fire.
MYTH: My home will be fine once it dries out.
Reality Flooding can cause damage to the foundation of a house and penetrate the walls and subfloors, causing mold and other problems.
MYTH: The Federal Government offers a variety of types of disaster recovery assistance. There are different types of assistance that benefit individuals in addition to individual assistance.
Reality Federal assistance varies, but may be available to state, local, tribal and territories, certain types of private nonprofit organizations and faith-based organizations, and to individuals and households. The SBA, HUD, USDA, and U.S. Department of Commerce may also have applicable assistance programs. Specifically, through FEMA’s Individuals and Households Program (IHP) programs, FEMA provides direct assistance to individuals and households, as well as state, local, tribal and territories governments to support individual survivors. For more information, visit the FEMA website.
MYTH: Everyone is eligible for FEMA assistance.
Reality After a Presidential declaration, disaster assistance may available for eligible disaster survivors in the form of financial housing assistance such as rental assistance, lodging expense reimbursement, and home repair or replacement assistance; and Direct Housing Assistance, in the form of manufactured housing units, multi-family lease and repair, and permanent or semi-permanent housing construction. These funds and programs are dispersed through FEMA’s Individuals and Households Program (IHP) and financial assistance provided should be used to bring damaged homes back to safe and sanitary living conditions. However, while federal disaster assistance grants are available, assistance is generally more typically a low-interest disaster loan from the Small Business Administration. For more information, visit the U.S. Small Business Administration website.
MYTH: Signing an assignment of benefit (AOB) agreement, which assigns insurance claim rights to a third party, is a fast way to recover from a storm or flood loss.
Reality An assignment of benefit agreement can be a great tool. But it is a legal document. Contact your insurance company before you sign away your benefits.
MYTH: An AOB is my only option when recovering from a loss.
Reality Signing an AOB is not your only choice. Contact your insurance company to understand your options.
MYTH: If I want to cancel an AOB agreement, I can easily back out.
Reality A properly executed AOB is a binding contract. You may have to get legal assistance to regain control over the insurance benefits.
FAQ & Questions
Questions? We’ve got you covered.
Why do I need flood insurance?
Flooding is the most frequent and expensive natural disaster in the U.S., according to the Federal Emergency Management Agency (FEMA). Yet, most people don’t realize that their homeowners insurance doesn’t typically cover flood.
With more than 20 percent of the National Flood Insurance Program’s (NFIP) claims coming from outside high-risk flood areas those who live in areas with low-to-moderate flooding risk should understand their risk and consider flood insurance.
How can I find out about my flood risk?
The way water flows and drains can change due to building development, changing weather patterns, wildfires or other disasters that alter the terrain. As a result, the government is constantly evaluating risks and revising flood maps to keep up with these changes, so it is a good idea to check the maps annually for updates or sign up to receive an alert when your communities’ flood map is updated.
To learn more about flood risks in your area, contact your local emergency management office or FEMA to look at a flood map.
Is flood insurance expensive?
NFIP coverage is typically around $700 a year in high risk areas. Property owners located in low-to-moderate risk areas should ask their agents if they are eligible for the Preferred Risk Policy, which provides flood insurance protection at a lower cost than a standard policy in a high-risk area.
Does flood insurance cover temporary living expenses?
Standard home insurance doesn't cover flood damage, but generally would provide additional living expenses coverage if your home were uninhabitable because of wind damage or other perils associated with the flood.
How can I find out what coverage I need to purchase?
Talk to your licensed insurance agent to discuss your needs. See the section below for useful questions to ask about coverage.
Can I purchase flood insurance during hurricane season?
Hurricane season starts June 1, which means homeowners and renters need to buy a National Flood Insurance Program (NFIP) policy at least 30 days prior for it to be in effect. You can purchase flood insurance any time, but it generally takes effect 30 days after purchase for coverage to take place. So, any damage done before the effective date is not covered.
Ask these questions before you buy.
Ask your agent
- Does my homeowners insurance cover flood?
- What flood zone do I live in? What is my property's flood risk?
- What will and won't be covered?
- How much coverage should I purchase for my building and for my contents?
- When will my policy become effective?
- Will my policy provide Replacement Cost Value or Actual Cash Value? What's the difference between the two?
- Do I qualify for a Preferred Risk Policy (PRP)?
- Does my community participate in NFIP's Community Rating System (CRS)? If so, does my home qualify for a CRS discount?
- Is flood insurance mandatory for my property? Will the lender require it?
- Are there additional expenses or agency fees?
- How can I pay for my policy?
- How do I renew my policy?
Tips & Tools
Be prepared before you buy.
Protect Your Home and Business
Flood insurance is a separate coverage that you can purchase through the National Flood Insurance Program (NFIP), which FEMA manages, or sometimes through a private insurer. Your agent may be able to assist you with an NFIP policy or a policy from a private insurer. For more about purchasing an NFIP policy, contact the NFIP Referral Call Center at 1-800-427-4661. For more information about private insurers writing flood coverage in your state, contact your department of insurance.
If you choose a private flood insurance policy, shop around and compare coverage and premiums before you decide which policy to buy. Be sure to ask about the waiting period. NFIP and some private flood policies have a 30-day waiting period unless a policy is bought at the same time as a newly purchased home.
Know Your Flood Policies
The NFIP standard flood insurance policy pays for direct physical damage to your insured property up to the replacement cost or actual cash value (ACV) of actual damages, or the policy limits of coverage, whichever is less.
- Leaking roof (unless due to poor maintenance
- Burst pipe
- Bath tub overflowing
- Damage to personal property from covered risks
- Water backup from an outside sewer (typically requires a rider)
- Structural or foundational damage up to $250,000 due to flood
- Overflowing inland or tidal waters
- Mudslide damage due to mud being carried by a river or stream of water
NFIP policies cover up to $250,000 of flood damage to a home's structure, including:
- Damage to the furnace, water heater, air conditioner and floor surfaces (carpeting and tile)
- Debris removal and clean up
- Coverage for basements, crawlspaces and ground level enclosures on an elevated home is limited, so talk to your agent about any restrictions in the policy
Personal property inside your home is not covered under the Building Property coverage form. However, coverage is available up to $100,000 for an additional premium.
- Clothes, washer and dryer
- Television and furniture
- Other personal belongings
Personal property is not covered under Building Property policy form. However, coverage is available for up to $500,000 and an additional premium.
Private insurers may have higher limits or broader coverage than NFIP policies. Work with your agent in understanding a private policy and comparing it to an NFIP policy.
Need help navigating flood insurance?
Flood Insurance Basics
Know the facts before you buy flood insurance. Use this helpful guide to learn more about Flood Insurance Basics.
What The Flood! Quiz
Test your knowledge of flood-related insurance with this NAIC interactive quiz. See if you have what it takes to protect your home from flood.