What Does Flood Insurance Cover, and How Does It Work?
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Flood insurance covers damage to your home that's caused by a flood. It also pays to replace items in your home, such as furniture, clothing and appliances.
The government sells most flood insurance policies through the National Flood Insurance Program (NFIP). Private insurance companies also sell plans that may offer higher coverage limits and lower rates.
What does flood insurance cover?
Flood insurance covers your home and what's inside it. An NFIP (government) policy will pay to repair up to $250,000 worth of damage to your house. You can also get up to $100,000 worth of coverage for your personal property.
Your plan will spell out what exactly each coverage type will pay for. For example, a National Flood Insurance Program (NFIP) policy will pay to replace your microwave, but not your rare coin collection.
NFIP coverage for your home
NFIP coverage for your personal property
- Foundation
- Electrical and plumbing systems
- Central air system and furnace
- Water heater
- Refrigerator, cooking stove and built-in appliances
- Permanently installed carpeting over an unfinished floor
NFIP coverage for your home
- Foundation
- Electrical and plumbing systems
- Central air system and furnace
- Water heater
- Refrigerator, cooking stove and built-in appliances
- Permanently installed carpeting over an unfinished floor
NFIP coverage for your personal property
- Clothing
- Furniture
- Electronics
- Portable microwave and portable air conditioners
- Dishwasher
- Washer and dryer
- Carpeting not covered as part of the structure
Federal flood insurance also comes with a list of things it will not pay for, called "exclusions" in your policy. Some of these items are typically covered by other types of insurance. For example, flood insurance doesn't pay for car repairs, but car insurance with comprehensive coverage will.
Where in your home the flood damage occurred can also impact if something is covered. For example, National Flood Insurance Program policies cover clothing, furniture and electronic equipment unless they're stored in your basement.
What does flood insurance not cover?
- Preventable damage caused by mold, mildew or moisture
- Money, precious metals and valuable papers
- Property outside of your home
- Hotel stays or other temporary housing
- Cars, motorcycles and boats
- Lost income
In addition, NFIP flood insurance won't cover certain items if they're kept below ground level. These include carpets, tiles, bookcases, wall panels and personal belongings, such as a couch or microwave.
Actual cash value (ACV) vs. replacement value
When you file a claim through the National Flood Insurance Program (NFIP), you normally won't get enough money to pay for a brand-new version of your damaged property. That's because the NFIP considers wear and tear when determining how much your property is worth, or its actual cash value.
For example, let's say a couch you bought four years ago was ruined in a flood. If your insurance company believes your couch was only worth $1,000 before the flood, that's all you'll get, even if a new couch costs $2,000.
Some companies that sell private flood insurance offer replacement value coverage, which would pay for the full cost of replacing your personal property. With a replacement value policy, you would get $2,000 that you could use to buy a new couch. Keep in mind that you'll pay more for replacement value flood insurance compared to flood insurance that uses actual cash value.
Private flood insurance
Private flood insurance is an alternative to NFIP government flood insurance. Private flood insurance can be better than an NFIP policy if you need high coverage limits or if it's cheaper.
Remember, NFIP flood insurance will only pay up to $250,000 for damage to your home. Many private flood insurance companies offer policies with far higher limits. For example, you can insure your home for up to $15 million with Chubb.
Keep in mind that the government sells NFIP policies through private companies. These companies may also sell their own private insurance in addition to NFIP plans. It's a good idea to compare several different plan options to get the best flood insurance.
Do you need flood insurance?
You should consider flood insurance if you live in an area that's at a high risk for flooding.
You need flood insurance if you have a federally insured mortgage and you live in a high-risk area, called a Special Flood Hazard Area (SFHA). Many private companies will also require that you have flood insurance if you live in a flood-prone place.
Even if your home is fully paid off or your mortgage lender doesn't require you to get flood insurance, it's still a good idea to get it if you live in a high-risk area. Special Flood Hazard Areas have a one in four chance of flooding every 30 years.
If you can't cover $69,000 of unexpected costs, the average NFIP payout, then you'll probably benefit from getting flood insurance if you live in an SFHA.
Moderate-to-low-risk areas
You're less likely to experience a flood if you live in a moderate-to-low-risk area. However, it's important to remember that most parts of the U.S. have occasional flooding. Forty percent of floods happen outside of high-risk areas, and 99% of U.S. counties had at least one flood between 1996 and 2019.
FEMA's flood insurance maps
The Federal Emergency Management Agency (FEMA) is responsible for creating flood zone maps that show the likelihood that an area will flood. These flood insurance maps help determine how much NFIP insurance costs.
FEMA runs the National Flood Insurance Program (NFIP). That means FEMA flood insurance, NFIP flood insurance and federal flood insurance are all the same.
You can check your flood risk online by using the flood zone map on FEMA's website. Enter a ZIP code or address into FEMA's map portal, zoom in until you find your area and click to view the map. If your home is listed as being in Zone A or Zone V, you're at high risk and should buy flood insurance.
You may live in a different flood zone than your neighbors. That's because FEMA considers factors like elevation when setting rates. So if you live at the bottom of a hill, you can expect to pay more for flood insurance than someone who lives near the top of the hill.
You'll also pay more for flood insurance if you live close to a river, lake or other large body of water.
How to mitigate flood risk at your property
With flood risk on the rise, taking steps to mitigate your property’s risk can be crucial in preventing hefty and unexpected damage. ValuePenguin home insurance expert Divya Sangameshwar recommends all homeowners consider insuring their property for flood damage — more than 90% of U.S. owner-occupied homes have homeowners insurance, but just 2.6% have NFIP flood insurance policies.
"A single flood has led to an average of $52,000 in damages, and just 1 inch of water can cause as much as $25,000 in damages," Sangameshwar says. "While paying $613 to $1,648 a year for flood insurance might be expensive for some families, going without could decimate your finances."
For Americans looking to prevent flood damage, Sangameshwar also offers the following advice:
- Research local flood history before buying. Before buying a home, it’s important to understand how much flood risk you’ll be assuming. "It’s now common to include flood risk information on multiple listing services (MLSs)," Sangameshwar says. "Sellers are also obligated to disclose information related to flooding, such as whether the property flooded before, so make sure you ask."
- Check with your mortgage provider about your flood insurance requirements. "If you live in a high-risk flood zone, your mortgage lender will require you to get flood insurance," Sangameshwar says. Homes located in high-risk zones will need an elevation certificate, or EC. The EC shows your home’s elevation in relation to how high floodwater will reach in the event of a major storm. This gives insurance companies an idea of how much risk is involved, which may impact your premium.
- Know what your insurance will and won’t cover. "Floor insurance covers flooding from heavy rain, rising rivers or flooding due to a natural disaster," Sangameshwar says. "They won’t cover water damage from a burst pipe — that would fall under your homeowners insurance policy. Additionally, insurance policies won’t cover you for water damage or flooding that comes from poor maintenance."
- Don’t wait until a storm is headed your way before buying flood insurance. "Most flood insurance policies have a 30-day waiting period before coverage is activated," Sangameshwar says. "The best time to review your flood insurance is at the beginning of the year."
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Flood-proof your home. Depending on your home’s level of risk, small changes can make a big difference. Sangameshwar recommends the following four steps to flood-proof your home:
- Keep your gutters in good condition. Faulty gutters can flood basements. Additionally, if your insurer finds your gutters are faulty or clogged, it may prevent you from receiving an insurance claim.
- Seal your basement. "Basements are the part of your home most likely to flood," Sangameshwar says. Use weather strips or caulk around openings to stop water intrusions.
- Don’t plant too close to your house. The roots of plants and trees in the ground can crack concrete and restrict the drainage of water.
- Consider installing extra equipment. A backwater valve can help close off drains to municipal sewer lines, which can prevent major flooding in your home in the event of a backup. Additionally, Sangameshwar recommends installing a sump pump or a French drain to further prevent unwanted moisture.
Frequently asked questions
What does flood insurance cover?
Flood insurance covers your home and many of the items inside of it. This includes damage to your foundation, walls and other parts of your house as well as coverage for your personal property like clothes and appliances.
Does homeowners insurance cover flooding?
No, homeowners insurance does not cover flooding. However, it may cover water damage caused by a broken pipe or backed-up sewer system.
Is flood insurance required?
You're required to get flood insurance if you have a federally backed mortgage and you live in a high-risk area, called a Special Flood Hazard Area (SFHA). Roughly 28% of homeowners have a federally backed mortgage. Some private lenders also require you to get flood insurance if you live in an SFHA.
How much flood insurance do you need?
You need enough flood insurance to cover your home rebuilding costs and to replace your current home furnishings, clothes, appliances and other possessions.
You can get up to $250,000 of coverage for your home and up to $100,000 of coverage for your possessions through an NFIP flood policy. This level of coverage will meet the needs of many homeowners.
Is flood insurance tax-deductible?
No, flood insurance is not normally tax-deductible. If you run a business out of your home, you might be able to deduct the cost of insuring the portion of your home that you use for business purposes.
Sources and methodology
Information about National Flood Insurance Program (NFIP) coverage limits and details is from FEMA.gov. Other facts and figures are from Floodsmart.gov and the Consumer Financial Protection Bureau.
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