Flood risk rises but most homeowners still don't have flood insurance

Homeowners are canceling flood insurance as rates rise

The cost of home insurance, along with FEMA’s Risk Rating 2.0, which increased flood insurance rates in many locations, has put a financial strain on many homeowners. For some, flood insurance was cut from their budget. Unfortunately, that leaves more homes exposed in an area where many are already underinsured.

“As their homeowners insurance rises, it is natural to look for alternative places to save; however, this can be a very costly gamble,” Hodges says.

Here’s a look at how many homeowners in our survey canceled their flood insurance in the top five states for flood claims.

Places with a higher flood risk saw the greatest increase in rates, as a general rule, in FEMA’s new rating system. FEMA claims data shows that the top five states for flood claims are Florida, Louisiana, New Jersey, New York and Texas. An incredible 75% of flood claims are paid in those five states.

Here’s a look at how much rates went up, on average, in those five states.

These states also pay higher than average home insurance rates, making expensive flood insurance something homeowners may opt out of when possible to keep costs down.

Why are flood insurance costs rising?

Flood insurance rates are rising in response to rising risk as well as changes in the way FEMA calculates how it prices policies for the anticipated risk in each area.

As severe weather becomes more frequent and heavy rainfall causes flooding in more and different locations, rates have to rise in order to cover the claims that are paid out.

That's compounded by the increase in the cost of building materials caused by inflation, tariffs and supply chain issues. The more it costs to rebuild after a flood, the higher rates will become.

How many Americans have flood insurance?

Statistics regarding how many homeowners have flood insurance vary. The Insurance Information Institute (Triple-I), per Mark Friedlander, director of corporate communications in Florida, told Insurance.com when discussing natural disaster underinsurance that 4% of Americans have flood insurance, but statistics on Triple-I's website range from 16% to 27%.

Our survey found that 21% of respondents say they have a flood insurance policy, landing in the middle of the estimates. Because flood policies are sold both by the National Flood Insurance Program (NFIP) and private companies, some discrepancy in the numbers is expected. 

Still, our poll results show a surprisingly high count of people with flood insurance compared to other statistics, which the location of respondents may influence; just over a quarter (25.7%) live in the top five states for flood claims.

Flood insurance in high-risk states

Based on our survey, here’s a look at how many people in each of the top five states for flood claims say they have flood insurance.

The numbers indicate that homeowners in these states take the risk of flooding fairly seriously; although several states, including Florida and New York, have a lower percentage than last year. Louisiana's percentage is up considerably from 44% last year. Each of these states has been hit by catastrophic hurricanes that led to serious flooding, and having seen the results of flooding is a powerful lesson.

The survey didn’t select the respondents' locations, so the higher-than-expected numbers may reflect more respondents who live in high-risk coastal areas. We also don't know if these homeowners have an NFIP policy or coverage through a private flood insurance company, where rates differ.

Flood insurance policies by state

Floods can happen in every state, and experts believe catastrophic flooding will likely become more frequent.

“Climate models suggest that a trend toward more precipitation falling in larger precipitation events is likely in the future. It is increasingly apparent that such a trend may already be underway,” Robinson says.

We asked all survey respondents whether they had a flood insurance policy. Below are the survey responses by state.

Once again, it’s worth noting that the number of respondents in some states was low, which means that the percentage who said they have flood insurance is affected by that number.

Should you buy flood insurance?

If you live in a high-risk flood area, you probably already know you need flood insurance, or may even be required by your mortgage company to buy it.

But millions of Americans live in lower-risk areas and may not think they need coverage until they do. As climate change drives unexpected weather patterns, whether you need flood insurance no longer has a cut-and-dried answer. Floods happen everywhere. And while the risk might still be low where you live, the cost of not having it is high.

“Usually, it is as simple as too much rain in too short a period. The result being flash flooding that can quickly engulf people, vehicles, buildings (including basement apartments) in dangerous flood waters. A tragic recent example of this in New Jersey is the initial flash flooding (followed later by riverine flooding) from post-Tropical Cyclone Ida on September 1, 2021,” Robinson says.

The good news is that flood insurance is very affordable in low-risk areas and well worth it for peace of mind. And if you’re in a high-risk area, even the higher premium is a good investment, considering that an inch of flood water can do $25,000 in damage, per the NFIP.

While everyone has to weigh risk against premiums, experts agree that far more people need flood insurance than have it.

“Everyone should be cognizant of weather forecasts, know how to receive watches and warnings of flooding (be it flash flooding or riverine flooding) and know how to respond to emergency information (e.g., “turn around, don’t drown” and much more). This is a matter of safety, but there is also concern for risks to infrastructure, perhaps your home, that should not be ignored,” Robinson says. “This is certainly most critical in areas with a high flood risk, but as we’ve seen recently in NJ, these areas are now something akin to moving targets with climate change and a keen influence of reconfigured flood zones.”

Methodology

In the spring of 2025, Insurance.com polled 1,500 people with insurance. The poll was conducted by Dynata. Homeowners were asked if they have flood insurance currently, and if they have canceled flood insurance in the past 12 months. All percentages in tables are rounded to the nearest whole number.

Sources:

FEMA. “Facts and Myths about flood insurance.” Accessed April 2025.

Helpful home insurance tools and calculators

• Home insurance calculator
• Condo insurance calculator
• Renters insurance calculator
• When to file a home insurance claim