Do I Need Flood Insurance?

By: Ben Cavallo, CIC, AAI, CISR

Together with partner Keith Signoriello, Ben Cavallo is the principal and co-owner of C&S Insurance.

Have you ever thought about how you might need flood insurance? If you’ve ever experienced flooding in your basement or the rest of your home or business, you know just how costly the damage can be. Just one inch of floodwater can cause up to $25,000 in damage. Maybe you have also experienced the reality that many standard renters and homeowners insurance policies do not cover flood damage.

Often, this comes down to where you live. In areas that experience heavy rainfall and frequent flooding—such as the Southeast US, where you likely get struck with hurricanes and tropical storms every summer and fall—your policy is less likely to cover the costs of flood damage.

It might be worthwhile to purchase flood insurance for your home. Read on to learn more about the costs, benefits, and how you can purchase a flood insurance policy.

Does my home insurance cover flood damage?

Standard homeowners and renters insurance policies do not cover floods. This is because flood damage is considered ‘gradual’ rather than sudden or accidental.

Certain types of water damage are considered flood damage. Generally, the rule of thumb is that if the water touches the ground before it enters your house, it’s considered flood damage or gradual water damage by insurance companies—and won’t be covered. This also includes water seeping through your foundation, mold, rot, corrosion, slow plumbing leaks, and leaks stemming from negligence such as roof, window, or plumbing disrepair. Damage from these sources won’t be covered by your typical homeowners insurance policy, either.

Some damage resulting from hurricanes and other severe weather will be covered by your average homeowners insurance policy. One example of an event that most likely will be covered is if a tree falls on your house during a storm and causes heavy water damage inside. Damage resulting from burst pipes, extinguishing a house fire, roof leaks, or damaged HVAC systems may also be covered, as long as they are not an issue of negligence.

How do I purchase flood insurance?

In the US, the Federal Emergency Management Agency (FEMA) provides flood insurance through the National Flood Insurance Program (NFIP). While managed by FEMA, the NFIP is delivered to the public through a network of more than 50 insurance providers and the NFIP Direct.

Flood insurance policies can protect buildings, the contents of a building, or both. The NFIP flood insurance policies can apply to property owners, renters, and business owners. These policies are available to anyone living in the close to 23,000 participating communities. You can visit floodsmart.gov to learn more and find a policy.

Only certain insurers can provide these policies as they must abide by FEMA’s terms and conditions.

Do I need flood insurance?

If you live in certain areas designated by FEMA as Special Flood Hazard Areas (SFHAs), you are required to purchase flood insurance. However, even outside of these zones, it may be a good idea to invest in a flood insurance policy to protect your home. In recent years, more than 40% of flood insurance claims have come from properties outside of high-risk areas—floods can happen just about anywhere that receives storms and heavy rainfall at any point during the year.

High-risk flood zones are areas with at least a 1% chance of flooding during a calendar year. If you’re purchasing a home or property in a high-risk area, your mortgage lender may ask that you purchase flood insurance as a condition of the loan.

Where is flood insurance required?

In some places, you are required by law to purchase flood insurance. FEMA designates certain areas as Special Flood Hazard Areas (SFHAs), which include coastal zones, low-lying regions, historically flood-prone areas, and places that receive consistently heavy rainfall.

Through FEMA’s flood maps, you can find out if you live in or are moving to one of these areas. You can also enter your address to determine if you are within a flood zone’s boundaries. SFHAs include parts of Louisiana, Texas, Florida, New York, and New Jersey.