How Does Flood Insurance Work?

Elizabeth Rivelli
Elizabeth Rivelli
Contributing Writer

Basic homeowners insurance policies do not cover damage from floods. If you live in a high-risk flood area, it is recommended to purchase flood insurance to protect your home from water damage. 

If you have a federally-backed mortgage on your home, you are legally required to carry flood insurance based on the National Flood Insurance Act (NFIA) of 1968 and Flood Disaster Protection Act (FDPA) of 1973. 

Private lenders often have their own requirements for flood insurance for homeowners in certain states. 

To find out if you are in a high-risk area for flooding, you can check your address with FEMA’s flood zone map

Do I Need Flood Insurance? 

Depending on your lender and location, flood insurance may be an absolute necessity. As flooding can cause extensive damage and even destroy homes, leading to costly repairs, flood insurance is always a beneficial protection. 

Without flood insurance, you are required to pay for any flood damages out-of-pocket. Floods can be caused by a number of events, such as hurricanes, tornadoes, heavy rains, overflowing rivers and storm surges. While some policies provide for damages caused by these events, they typically specifically exclude flood damage from these natural disasters.

What Does Flood Insurance Cover?

  • Building Structure: up to $250,000
  • Personal Property: up to $100,000
  • Valuables and Business Property: Up to $2,500

Flood insurance is sold as a standalone insurance policy, meaning it’s not an optional coverage addition to your homeowners insurance. Homeowners will purchase a policy through the National Flood Insurance Program (NFIP), a process which your insurance provider may help facilitate. 

Like other types of insurance, flood insurance policies have varied coverage limits. An NFIP policy offers structural coverage up to $250,000, personal property coverage up to $100,000 and valuables and business property up to $2,500.

If your home was damaged in a flood, insurance would reimburse you up to $250,000 to repair your home’s structure, up to $100,000 to repair or replace your personal possessions, and up to $2,500 to cover the cost of damaged or ruined valuables, like fur, jewelry, or business equipment.

What Isn’t Covered by Flood Insurance?

Flood insurance covers the typical losses a homeowner would face after a flood, such as damage to flooring materials, paint or drywall, or exterior siding. 

However, flood insurance doesn’t cover everything. For example, if you run a business out of your home and it was devastated by a flood, insurance would not cover financial losses if you could no longer operate the business. 

It also doesn’t cover loss of use or additional living expenses if your home was damaged in a flood and you couldn’t live there while it was being repaired. This is a coverage you should discuss with your homeowners insurance provider.  

Where Can I Find Flood Insurance? 

Homeowners can purchase flood insurance through the National Flood Insurance Program or through their insurance company, who will facilitate the purchase through the NFIP. 

If you have a mortgage on your home, contact your lender to determine their requirements for flood insurance. 
Before you purchase a policy, make sure you know the minimum amount of insurance that is required. You can work with your homeowners insurance provider to determine how much coverage is right for you, based on the value of your home and personal belongings.

About the Authors

Elizabeth Rivelli

Elizabeth Rivelli Contributing Writer

Elizabeth Rivelli is an insurance writer for Over the last year, she has covered insurance providers, best policies, industry trends and more. Elizabeth has been featured in The Simple Dollar, Bankrate and, among others. She holds a bachelor's degree in Communication Studies from Northeastern University in Boston, MA. The Best Term Life Insurance Companies is Elizabeth’s favorite review on