Standard homeowners insurance excludes flood as a peril. If surface flooding, storm surge, river overflow, or intense rainfall damages your home, those losses are generally not covered by a homeowners policy. Flood coverage is purchased separately—either through FEMA’s National Flood Insurance Program (NFIP) or from a private insurer (how to buy). Under FEMA’s modern pricing approach, Risk Rating 2.0, premiums reflect property‑specific risk factors such as distance to water, elevation/first‑floor height, and foundation type rather than only the mapped zone.
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.
For regulated lenders, this mandate is implemented in uniform interagency rules (e.g., 12 CFR part 22) and 42 U.S.C. § 4012a. Lenders must require flood insurance when making, increasing, extending, or renewing a loan on a building in a FEMA Special Flood Hazard Area (SFHA); they must escrow premiums (with limited exceptions) and force‑place coverage if it lapses. Lenders must also accept qualifying private flood insurance under the agencies’ 2019 final rule, and FHA permits eligible private flood policies for FHA‑insured mortgages under its 2022 rule. For practical compliance details (escrow, force‑placement, and lender discretion to require more than the federal minimums), see the Interagency Q&As (FDIC).
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?
If your property is in an SFHA and you have a regulated or federally backed loan, insurance is mandatory. Even outside SFHAs, damaging floods are common. FEMA’s National Flood Hazard Layer is updated frequently—often weekly—to reflect effective map changes, so recheck status during purchase or refinance (NFHL; Map Service Center). New Preliminary maps go through an appeal period before becoming Effective, and entering the SFHA can trigger a lender requirement when maps take effect (Risk MAP; Mandatory Purchase guidelines). If you believe your structure is incorrectly mapped into an SFHA, consider a Letter of Map Amendment/Revision via FEMA’s LOMC process.
Costs vary under Risk Rating 2.0 based on property characteristics (e.g., distance to water, flood frequency/severity, elevation/first‑floor height, foundation type, and replacement cost). The Insurance Information Institute cites FEMA data showing a recent nationwide average NFIP premium of about $958 per policy, with wide variation by location and risk (III). Total cost typically includes FEMA‑set charges such as the HFIAA surcharge ($25 for a primary residence; $250 for most non‑primary), a Reserve Fund Assessment, and a Federal Policy Fee; communities in FEMA’s Community Rating System can earn premium discounts up to 45% (Flood Insurance Manual). Most renewals are subject to an annual cap on premium changes (generally up to 18% on average). NFIP policies usually have a 30‑day waiting period before coverage begins, with exceptions such as loan closings (waiting period).
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?
NFIP policies cover direct physical loss by flood to insured building and covered contents, subject to policy terms. Important NFIP limitations include no coverage for additional living expenses (loss of use) and no business interruption coverage. Contents are typically paid at actual cash value, while eligible single‑family primary residences insured to sufficient limits may receive replacement cost on covered building items (Summary of Coverage). Basement coverage is limited (structural elements and specified mechanicals) and many below‑grade improvements/contents are excluded. NFIP also includes Increased Cost of Compliance coverage up to $30,000 to help meet local floodplain requirements after qualifying losses (ICC). NFIP claims have required timelines (e.g., Proof of Loss deadlines); review FEMA’s guidance for current requirements (claims overview).
However, flood insurance doesn’t cover everything. If you run a business out of your home, NFIP does not cover lost income or business interruption. Some private flood policies may offer broader options (e.g., additional living expenses, higher limits, or basement improvements) subject to insurer underwriting.
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 or consider a private flood policy that offers it.
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.
