Flood is the number one disaster in the United States. In fact, all 50 states have experienced damaging floods or flash floods in the past 5 years. And it’s not just the most common disaster—it’s also one of the most expensive. Even a single inch of water in your home can cost thousands of dollars in repairs and replacements.
Flood-related damage is almost never covered by your homeowners insurance. So if you want to protect your home from the expensive and serious damages from flood, you need flood insurance. Flood insurance is especially important in high-risk areas, and sometimes it’s mandatory by law.
What do you need to know about purchasing flood insurance in high-risk areas so you are thoroughly covered at the lowest cost to you?
What is a high-risk flood zone?
The Federal Emergency Management Agency (FEMA) creates flood zones throughout the U.S. Each flood zone is given a risk level: low-, moderate-, or high-risk. FEMA will usually make this determination based on historical and geographical factors about the area, like previous floods, cause of floods, nearby bodies of water, hills and mountains, local drainage systems, and costal hazard areas.
High-risk flood zones, also called a Special Flood Hazard Area (SFHA), are those areas that are highly susceptible to flooding. In high-risk areas, there is at least a 1 in 4 chance of flooding during a 30-year mortgage. These areas also pose a greater risk for more damaging floods.
If you are in a high-risk flood zone with a mortgage on your home, you are usually required to have flood insurance. This protects the bank or mortgage lender from disaster if you have a flood.
The same is usually true if you are renting in a high-risk zone, as your landlord may want additional protection on the unit. (Also note that your landlord’s flood policy doesn’t protect your own belongings, so you need flood insurance in order to protect all of your items items inside the rental unit.)
If you are in a high-risk flood zone and you don’t have any loans out on your house, you aren’t typically required to have flood insurance—but you’ll likely want it anyway. Living in a high-risk flood zone means that you are vulnerable to the exorbitant costs that come with flooding damages.
If you live in a moderate- or low-risk area, you usually aren’t required to have flood insurance. Although the risk of flooding isn’t as high, no one is immune from the disasters of flooding—especially since storms and hurricanes have had such unpredictable patterns in recent years. In fact, 20% of all NFIP flood insurance claims are for those buildings outside of high-risk areas. Even if you’re not in a high-risk zone, you should consider flood insurance for your home.
Flood insurance is the only way to protect your home and belongings from flood damage.
Find out if you live in a high-risk flood zone with FEMA’s Flood Map Service Center.
Will I be covered by federal assistance?
A lot of homeowners make the mistake of assuming that all floods will be covered and paid for by FEMA. This is especially common in SFHA zones because individuals assume that FEMA is “watching out for” high-risk homes more.
But this is not always the case. In fact, FEMA actually rarely steps in to provide assistance. Only in situations where it is declared a state emergency by a government official will FEMA step in to help.
If a major hurricane or storm hits the area, you may get some assistance—but you also may not. You may also not get enough financial assistance to help you rebuild your home and refurnish all of your items.
That means you can’t rely on federal assistance. You need to purchase flood insurance, especially if you’re in a high-risk area.
What should my flood insurance cover?
Flood insurance will only cover flooding. This means it typically does not cover any other type of water damage, like a burst pipe (which is covered under homeowners insurance) or rain that comes through a damaged window or a hole in the roof (which is considered storm-related, not flood-related).
Flood insurance covers damage caused by external flooding—that then causes water damage inside your house. For example, a major storm came through and flooded your street. The water on your street seeped into your basement. Flood insurance would cover that. Another example would be if your house were flooded because a city water main pipe broke and flooded your entire street that damaged your house.
There are two types of flood insurance: building coverage and contents coverage.
Building coverage protects foundational elements and equipment from flood damage. This includes everything from the structure of your house to the furnace, water heater, and circuit breaker.
Contents coverage protects all of your belongings inside the structure. This can include carpets, furniture, wall fixtures, electronics, and even clothing. It may not include special items like fine art or jewelry, so make sure you talk to an agent about these items.
How do you get flood insurance for high-risk areas?
If you live in a community that participates in the National Flood Insurance Program (NFIP), you can purchase insurance directly through them. Most high-risk flood zones participate. You can see participating communities here.
You can also purchase flood insurance through a private party. This actually is often a better choice than the NFIP anyway, because you can bundle your homeowners policies for greater cost savings.
Working with a company also gives you a single “point person” for all of your needs. So if something happens in your home and you’re not sure which of your insurance policies it falls under (and sometimes it falls under multiple policies), your insurance agent can help you out.
Plus, private flood insurance typically offers higher coverage limits than the NFIP, and it’s often at a cheaper cost. There’s also a shorter waiting period of around 14 days compared to the federal 30-day window.
Is flood insurance expensive?
One of the most common concerns we hear is the price of flood insurance. It’s true that flood insurance is one of the costlier add-on insurance policies. The typical cost for flood insurance is $700 yearly, according to FEMA. Most flood insurance will have certain deductibles as well, so it’s important to take this into account as well.
It’s also true that there’s not much you can do to reduce your costs. Your insurance company usually determines the premium you pay based on your home’s risk for flood. That’s why high-risk homes tend to have significantly greater costs for flood insurance. The “risk” zone you’re in isn’t the only factor. Your insurer will also consider your home’s risk of flood based on age of home, size, building materials, and belongings.
But there are still some ways you can reduce the premium you’re spending each month to protect your home from flood disaster.
1. Bundle. Bundling your insurance can help save on overall costs you’re paying each month.
2. Install flood safety features. Some insurers will reduce costs if you have certain flood prevention methods and installations. If you live in a coastal area, you may be required to input a Coastal Barrier Resource System (CBRS).
If you live by the ocean, you can elevate your house to protect against larger waves. For example, after Hurricane Sandy’s major destruction, homeowners on the Jersey Shore are now required by law and insurers to elevate their homes.
3. Shop around. Whether you’re proactive or reactive, you deserve to get the best price for your flood insurance. Just like you’d shop around for auto or homeowners insurance, don’t be afraid to do some comparison shopping with your flood insurance as well.
Not sure where to start shopping around for flood policies? We can help. Don’t wait for disaster to strike before taking action.