How does flood insurance work?

Flooding is the most common natural disaster in the United States. It's also the most expensive, costing homeowners, insurers and the government billions each year. Because floods are not covered by standard homeowners insurance, you should seriously consider a flood insurance policy if you live in a risky area, or even if you don't.

After a particularly heavy year of snow, record-setting in some places, 2023 spring flooding is a high risk in many parts of the country. Meanwhile, extreme weather events like California's atmospheric rivers can result in flooding in unexpected places.  Flood insurance is the only way to protect yourself from damage done by overland flooding.

Read on to learn what flood insurance covers, how much it costs, how a flood insurance deductible works, who needs and how to buy it.

Does homeowners insurance cover flooding?

Homeowners insurance does not cover damage from flooding unless the flooding originated within the home or from the sky as rainfall. It covers water damage from bursting pipes and overflowing toilets, sinks and tubs. It usually covers the costs if your dishwasher or water heater explodes.

Your homeowners insurance additionally kicks in if a storm like a hurricane blows off your roof and rain damages your interior.

However, your homeowners insurance doesn't cover damage caused by flooding from creeks, rivers, or lakes or from flash flooding (even if the flood was the result of rain). In those cases, you need a flood insurance policy.

How does flood insurance work?

Flood insurance works like any other insurance policy, but there are a few differences.

Flood policies are primarily sold through the National Flood Insurance Program (NFIP), although you can also buy them from private insurers. Unlike most other types of insurance, flood policy rates don't vary between insurers.

Also unlike standard homeowners insurance, flood insurance doesn't kick in immediately when you sign up. That prevents you from buying a policy as a storm heads your way. There's a 30-day waiting period in most cases.

However, there are a few exceptions:

• If your address was newly added to the SFHA map and you buy flood insurance within the 13-month period following a map revision.
• If you're renewing your flood policy and increase your coverage.
• If your home is affected by flooding on burned federal land and you buy a policy within 60 days of the fire's containment.
• If you just bought a house and your lender requires flood coverage.

If you wait until the rainy season to buy your flood policy, you could be trapped in a nightmare scenario -- having purchased insurance but ineligible for coverage if a storm hits within a month. For maximum peace of mind, it may be best to "set it and forget it."

Otherwise, flood insurance is a lot like standard home insurance (but does not replace standard home insurance). You'll pay a premium to the insurance company for the policy annually and if you file a claim, you'll pay your deductible out-of-pocket before the company kicks in to pay the rest.

What is the flood insurance deductible?

A flood policy comes with separate deductibles for the building and its contents. You typically get to choose the deductible amount. Common flood deductibles range from $1,000 to $5,000.

As with other types of insurance, a higher deductible on your flood policy will result in a lower premium; however, if you have a mortgage, your lender may not allow you to increase your deductible beyond specified limits.

What does flood insurance cover?

Flood insurance covers losses directly resulting from flooding or flood-related erosion caused by heavy or prolonged rain, snowmelt, coastal storm surges, blocked storm drainage systems, levee dam failure and similar events.

Flood insurers reimburse policyholders for structural damage, including:

• The insured building and its foundation.
• The electrical and plumbing systems.
• Central air-conditioning systems, furnaces and water heaters.
• Refrigerators, cooking stoves and built-in appliances like dishwashers and trash compactors.
• Permanently installed carpeting and flooring.
• Permanently installed paneling, wallboard and built-in bookcases and cabinets.
• Window blinds and shutters.
• Detached garages (up to 10% of structural coverage). Other outbuildings require separate policies.
• Debris removal.

In addition, flood insurance covers damage and loss of personal property as follows:

• Clothing, furniture and electronics.
• Curtains and window treatments.
• Portable and window air-conditioners.
• Portable microwave ovens, dishwashers and other small appliances.
• Rugs.
• Clothes washers and dryers.
• Food freezers and the food in them.
• Valuables like artwork, jewelry and furs (up to $2,500).

If you have a lot of valuables, ask your insurer about additional riders or endorsements to extend your flood coverage.

The FEMA flood insurance guide is also a helpful resource that provides details on claims, coverage and costs.

Flood insurance coverage limits

The NFIP lets you insure your house for up to $250,000 and your personal property (contents) for up to $100,000. If you rent, you can buy up to $100,000 in coverage for your belongings. For non-residential property, you can buy up to $500,000 of coverage for the building and contents.

What isn’t covered by flood insurance?

We've gone over what flood insurance covers. Now let's review what it doesn't cover.

Flooding in the first 30 days

Standard flood insurance plugs many holes in your homeowners policy, but it's not foolproof. Your coverage will not kick in if purchased less than 30 days prior to the occurrence of flood damage.

"We always encourage people to educate themselves on what their home's risk might be, and talk to their insurance agent well before there's a storm on the horizon or any type of flooding situation that would come up," says Christina Loznicka, a spokesperson for Allstate Insurance in Northbrook, Illinois.

Damages exceeding policy limits

Federal flood insurance coverage is capped at $350,000 -- $250,000 for your dwelling and $100,000 for your personal possessions. If your house or the property is valued at more than those limits, you could be at risk of being underinsured.

To protect yourself and your belongings, it's important to determine if you need additional coverage, says Loznicka. Ask your insurance agent if you're eligible to purchase excess flood insurance, which is offered by private insurers.

Such policies can provide up to several million dollars of extra coverage. To buy supplemental private flood insurance policyholders must first purchase NFIP coverage before they can buy the extra coverage, which has widely varying premium rates.

You can also buy a “primary,” or stand-alone flood insurance policy from a private company if you need more coverage.

Damage to finished basements

Under NFIP guidelines, a basement is defined as any area of a building that has its floor below ground level on all sides, says Racusen.

Flood insurance doesn't cover cosmetic improvements to basements. So if storm-related flooding damages new furniture or carpeting, it will not be covered. Neither will damage to things like new sinks or bathtubs.

In the event of a flood, a standard homeowners insurance policy won't cover those damages either, Racusen says. You'll have to pay out-of-pocket if you don't have special endorsements or riders.

Landscaping and exterior features

If a flood takes out your trees or plants, you're out of luck. Also excluded are features like fountains, decks, patios, walkways, fences, hot tubs, swimming pools, wells and septic systems.

Additional living expenses

If your home becomes unlivable in the wake of a flood, your insurance will not cover the cost of alternative living arrangements. While your standard homeowners policy includes this for other disasters, it doesn't apply to flooding. You may be able to purchase additional coverage -- ask your agent.

Other flood insurance exclusions

Other items excluded from flood coverage include:

• Damage caused by moisture, mildew, or mold that could have been prevented by you
• Currency, precious metals, and valuable papers like stock certificates
• Financial losses caused by the loss of use of the property
• Vehicles

Who needs flood insurance?

You need flood insurance if you live in a flood zone and your mortgage company requires it. Can you get flood insurance if you don’t live in a flood zone? Yes; in fact, many flood insurance claims come outside of flood zones.

• Mortgage lenders require homebuyers in designated flood plains (aka Special Flood Hazard Areas, or SFHAs) to purchase flood insurance. You're not required to get flood insurance if you don't live in a flood zone and have a mortgage. 
• According to the Insurance Information Institute, more than one-fifth of claims for flood damage originates in homes that are in low-to-moderate risk areas -- households that aren't required to purchase flood insurance by lenders.
• As the experts at the NFIP say, "Everyone lives in a flood zone."
• The fact that one in five flood claims originate outside high-risk areas, while scary, completely ignores the cost to uninsured homeowners. That's because only about 12% of homeowners nationwide have flood insurance. Many homeowners affected by floods have no policies, which leaves them with no help. In fact, one-third of all flood-related disaster assistance, which is available to uninsured homeowners, went to those not in designated flood plains.
• Without insurance, disaster relief from floods mostly takes the form of the federal government's low-interest loans. These loans must be paid back. Purchasing a flood insurance policy is the only way to fully protect yourself from flood-related costs.

How much is flood insurance?

The average annual flood insurance cost based on the most recent data $734.

Flood insurance cost depends largely on your home's risk. If your home is located in a low-to-moderate risk area, you're eligible for Preferred Risk Policy (PRP) rates. How much you pay depends on if you have a basement or not and the amount of building and contents coverage you choose. If you live in a high-risk area, the rates will be much higher.

Is flood insurance the same price everywhere? No, Here are the average flood insurance rates by state based on the most recent data:

Source: National Flood Insurance Program

How much is flood insurance for those in flood zones?

For those in higher-risk areas (Zones V and A), the flood insurance cost depends on your home's size, construction, location and your deductible.

The Base Flood Elevation, or BFE, shown on the Flood Insurance Rate Map (FIRM) for high-risk flood zones indicates the water surface elevation resulting from a flood that has a 1% chance of equaling or exceeding that level in any given year.

The primary way to reduce your flood insurance cost is to increase your home's elevation. Going from four feet below the BSE to three feet above it would save over $90,000 in 10 years at today's premiums. Homeowners may be able to get low-cost loans or grants to accomplish this.

The other way to lower costs is to increase your deductible. The minimum deductible for flood insurance is $1,000, and the maximum deductible is $10,000. You can save up to 40% on your premiums by increasing your deductible.

For those in the riskiest areas, the savings realized by increasing to a $10,000 deductible would make up the added cost in less than three years.

How do you buy flood insurance?

You can buy flood insurance from the NFIP, backed by FEMA. Or, you can buy it from a private insurance company, which offers more protection but costs more than a federal NFIP policy.

If you buy an NFIP plan, you would still get it from a standard home insurance company. Standard home insurance companies will write the NFIP policy, though it is still administered by NFIP. A list of home insurance companies that provide NFIP policies is on the FEMA website, as well as locator tool to find companies that sell NFIP plans in your state.

Because the price for NFIP policies is standard, there is no comparison shopping. So, the only issue is how much coverage to buy. Coverage amounts are capped at $250,000 for your dwelling and $100,000 for your personal possessions, so if your home and its contents are worth less, you can buy lower limits, which would cost less.

Private flood insurance can supplement or replace an NFIP policy, providing coverage for the house, outdoor property, detached structures, swimming pools and basements. You would purchase a policy by contacting these companies and finding out what coverage limits are offered and making sure you get limits high enough to cover your home and personal possessions. Private flood insurance policies typically have limits of $500,000, $1 million or $5 million for dwelling coverage and a range from $250,000 to $1 million for personal items. So be sure to compare policies with limits that best match the value of your home and its contents. Just like standard home insurance, compare identical coverage limits to see who offers the best price.

Where to buy flood insurance

As noted, you buy flood insurance through insurance companies – and while you probably will end up going with an insurer that sells through the NFIP, there are a number of private insurance companies that sell flood insurance that isn’t linked to the federal program. Here is a list of private companies that sell flood insurance:

• Chubb offers stand-alone, or primary, flood insurance, as well as supplemental, or excess, coverage that works with an NFIP plan.
• Wright Flood Insurance offers stand-alone flood insurance in Florida, New Jersey and South Carolina.
• Flood Guard insurance is available as primary or supplemental flood insurance in Arizona, California, Illinois, Indiana, Nevada, Oklahoma, Oregon, Pennsylvania, South Carolina and Utah.
• TypTap offers flood insurance in California, Florida, Maryland, New Jersey, Pennsylvania, South Carolina and Texas.

Pros and cons of private flood insurance

Though private policies cost more than federal plans, most private sellers allow payments to be made in installments and don’t require a waiting period for coverage to go into effect. Additionally, most also offer replacement cost for your personal items, rather than the actual cash value, which is lower.

But bear in mind that private flood insurance is a concept that’s somewhat untested and doesn’t have a long history. The private flood insurance industry has really just started to come into its own the last several years or so – and if you have a flood, after your insurer makes that payout, they can cancel your policy. The NFIP cannot. So that’s one reason to consider going with or sticking with the NFIP.

How to file a flood insurance claim

A flood insurance claim is much like any other insurance claim. Follow these steps to get a claim started.

1. Contact your insurer as soon as possible. All flood insurance policies require you to give timely written notice of loss. Have your policy number and a phone number and/or e-mail address where you can be reached.

2. Separate your damaged and undamaged property. Don't dispose of anything before an adjuster has seen it unless required by law. If you have to get rid of anything (for instance, mold-infested carpet), take pictures and keep samples of the damaged goods (a small piece of the carpet).

You need to do whatever you can to prevent further damage and protect undamaged property, but you'll want to consult with your flood adjuster or flood insurer before hiring anyone to do repairs.

3. Compile a list of damaged personal property. It's smart to create a list before flooding, so all you have to do is check off the items that are damaged. The list should have an item description, cost, model and serial number (when applicable), and estimated dollar loss. Include any receipts, photos, and warranties you have.

4. Detail structural damages. Note structural loss/damage to point out to the insurance adjuster. Your adjuster will usually contact you within 24-48 hours after being notified of your loss. Then, he or she will come to view your property. You may ask the adjuster for an advance or partial payment. If you have a mortgage, your mortgage company will need to sign the building property advance check.

5. Complete a Proof of Loss statement containing the information required by your flood insurance policy within 60 days after the loss. The Proof of Loss includes a detailed estimate to replace or repair the damaged structure and contents. In most cases, the adjuster can provide you with a suggested Proof of Loss.

Your claim is payable after you and the insurer agree on the amount of damages, and the insurer receives your complete, accurate and signed Proof of Loss in support of your claim.

Tips for filing flood claims in Texas and Florida

Texas and Florida often get hit hard by hurricanes.

If you live in Texas, you may be interested in learning about the “blue tarp law.” It’s often considered an anti-consumer law and one that favors insurance companies. That’s because, well, it does make life easier for insurance companies. Here’s a quick overview of related issues and stipulations:

• Cuts interest on unpaid claims for which the insurance company is found liable from 18% to 8%.
• Requires attorneys to file a notice letter with an insurance company more than 60 days prior to a lawsuit being filed. The letter must explain details that justify the claim as well as the amount of damages suffered.
• Lawsuits filed without the prior notice letter will be abated or delayed; the intent is it will provide time to satisfy the notice letter provision.
• The notice provision allows inspection of the property and provides additional time for insurance companies to avoid litigation by settling the dispute, claim proponents.
• In addition to insurance claims for flood damage, the law applies to claims for damage connected to hailstorms, earthquakes, wildfires, tremors, tornadoes, lightning and wind, snow and rain storms.

Meanwhile, in Florida, hiring a public adjuster is likely worthwhile. The adjuster your insurance company assigns to evaluate your home will decide what your final claim pay-out amount will be. You can hire a public adjuster to negotiate on your behalf at the outset of filing your claim, or, you can bring one in if you disagree with the amount set by your insurance company’s adjuster. Some key tips about public adjusters:

• Most public adjusters charge a percentage of the settlement, usually between 5 and 12%.
• Generally, public adjusters benefit homeowners who are filing complex claims for a very significant amount of damage costing more than $10,000.
• Hiring a public adjuster at the beginning of the claims process will save time; hiring one at the end can add an extra month or so to the time frame for settling a claim.
• Policyholders with public adjuster representation typically received higher settlements than those without public adjusters.

What qualifies as a flood insurance claim?

Generally, the physical structure of your home is covered by damage caused due to a flood, and often the items inside your house or apartment. So that would be the foundation of your house, the plumbing and electrical wires, the central air and heating systems, attached bookcases (but maybe not detached ones), cabinets and so on. The physical dwelling.

Everything inside, like a detached bookcase, your bed, your computer and TV and so on? It depends on whether you bought a policy that includes coverage for “personal contents.”

What is almost never covered are expenses like a hotel to stay in while your home is drying out. You also won’t get coverage for most mold, mildew or moisture damage – if it’s determined that the homeowner could have prevented it. In other words, if you file your claim three months after the flood (like you would do that), and you have mold everywhere, well… your policy won’t cover that. If the mold formed days or a week or two after the flood, and you filed away, you’ll likely be covered.

Your car also probably won’t be covered in a flood – but don’t panic. Your car insurance policy may cover the damage.

When would a flood insurance claim be denied?

• You don’t have flood insurance. That is, you have homeowner’s insurance or renters’ insurance, and you’re well insured. But you don’t actually have flood insurance. 
• The damage was pre-existing. Maybe your insurer suspects that the mold on your basement walls occurred long before the flood, and you’re just using the flood as an excuse to get your basement repaired.
• The damage was created by something other than water from the flood. Maybe the insurer will argue that it was wind that caused your damage and not the nearby ocean or river sloshing around. Still, if you have comprehensive homeowners’ insurance or renters’ insurance, while your flood insurance policy may not cover certain damage, your other insurance policies might. So maybe the wind damage will be covered by a different policy other than your flood policy.
• The earth moving damaged your home, not the flood. If the flood somehow caused the ground to move, and then the ground moving damaged your home, your claim could be denied as flood insurance doesn't cover earth movement.
• You bought your insurance policy at the last moment. That is, the flood occurred less than 30 days after purchasing the insurance.
• The damage was in your basement. It isn’t that your basement damage from a flood won’t be covered, but it may not be. Basements are often a gray area with flood insurers. For instance, you may get coverage to get the basement dried out, but if you had carpeting and drywall, you probably won’t get coverage to restore your finished basement.

How I can appeal a flood insurance claim?

According to FloodSmart.gov, the federal website run by the NFIP (National Flood Insurance Program), you have four options. First, you can work with your insurance company to find a resolution. Secondly, you can file an appeal with FEMA. Thirdly, seek an appraisal. Fourth and lastly, if there's simply no other choice, file a lawsuit.

A few helpful things to note.

Don’t discount checking with your insurance agent. It's worth going to your insurance agency right away if your flood claim was denied. Maybe your claim was rejected due to some simple paperwork mistake, and then you can resubmit it and get your money.

File an appeal quickly. If your claim is rejected, you need to file within 60 days. You can file without an attorney, and there are no fees to file. You’ll file through the Federal Emergency Management Agency (FEMA), the federal agency that oversees the National Flood Insurance Program (NFIP).

Don’t appeal and do an appraisal. You have to do one or the other. But you may want to do an appraisal if you and your insurer agree that you have damage that is covered but disagree about how much you should be paid. An appraisal may solve that problem.

If you sue. You would have to do it within one year of your claim being denied. You can sue after you appeal if you want, but you can’t appeal once you file a lawsuit. So if you’re thinking of doing one or the other, appeal first. Then, if you need to, you can sue (but filing an appeal won’t extend the one-year period of time to file suit).

What are the best flood insurance companies?

Most insurance companies sell flood insurance through the government-backed federal NFIP. So often there is no shopping around for a better flood insurance rate. What State Farm offers you will be what Allstate or Liberty Mutual offers you.

That said, there are some insurance companies that sell private flood insurance policies, which are not connected with the NFIP. To find out which is the best in terms of customer service, check the company's social media websites, research their history and see if there have been complaints and check the strength of their financial ratings.

But, generally speaking, looking for the best company that sells flood coverage is usually a matter of going with your favorite insurer – and if your own insurance company sells flood insurance, and you’re happy with your insurance company, then you might as well get flood insurance from your own insurance provider.

But some of the reputable companies that sell flood insurance policies include:

• Amica
• USAA
• Encompass
• Allstate
• Liberty Mutual
• State Farm
• Progressive
• Geico

Still, while the flood insurance through the federal program is the same, obviously not every company is the same. The customer service part of the insurance equation is very important. After a natural disaster, if you need to make a claim, you want to be able to do it quickly and without a lot of hassle. Insurance.com’s ranking of the best homeowners insurance companies can help you decide.

Flood insurance: Frequently asked questions

How much flood insurance do I need?

You want to have enough coverage to help you rebuild if your home gets damaged by a flood. The NFIP caps off coverage at $250,000 for your house and $100,000 for its contents. If you need more than that, you can see what private insurers offer flood insurance in your area. Just as you would with home insurance, be sure to buy coverage amounts that best match what it would cost to repair or rebuild your home completely at the equal quality — at current prices – which is the replacement cost. Figuring out how to calculate home replacement cost can be a challenging task, but can be done by making a thorough inventory of building materials used for your home, using online calculators, or, you can hire an appraiser to do it for you.

Can I get flood insurance if I filed flood insurance claims?

Yes, you can get flood insurance if the property has been flooded previously. Your premium will likely reflect the added risk of subsequent flooding.

Can I pay a monthly premium for flood insurance?

No, you have to pay for a full year if you buy a policy through NFIP. The NFIP accepts checks and major credit cards. If you buy a private policy, most allow installments.

My home and contents are worth more than $350,000. Can I buy additional coverage?

The NFIP doesn't offer extended coverage, but you can check with private insurers about expanded coverage. Their rates are not regulated, so you'll need to shop with competing providers to get the best rates.

How do I find out my home's flood risk?

Flood zones are mapped nationwide. You can enter your address into the flood risk tool provided by FEMA to see your local risk profile.

My house is on a hill and will never flood, though it's in a flood zone. Can I get out of buying flood insurance?

Can you get flood insurance if you are not in flood zone? Local areas within flood zones may not be considered high risk if the home is higher than the designated Base Flood Elevation, or BFE. To get an exemption, you can submit property and elevation materials with a Letter of Map Amendment (LOMA). For detailed information, call FEMA toll-free at 1.877.336.2627.