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Daria Uhlig is a seasoned writer and editor with more than a decade of experience creating personal finance content. She has been writing for Compare.com since 2024, and her work also appears in notable publications like USA Today, Nasdaq, MSN, Yahoo Finance, Fox Business, Credible, GOBankingRates, AOL, and Insurify.
As a licensed Realtor and resort property manager, Daria specializes in real estate topics, including landlord, homeowners, and renters insurance.
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Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. With nearly a decade of experience writing and editing insurance and personal finance articles, his work has helped readers discover substantial savings on necessary expenses, including insurance, transportation, health care, and more. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.
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Flood insurance covers your home and belongings from flood damage.[1] But despite the risks of flooding (even outside of high-risk floodplains) homeowners insurance and renters insurance policies don’t cover flood damage.
Most homeowners buy their flood policies through the National Flood Insurance Program (NFIP), a federally subsidized insurance program from the Federal Emergency Management Agency (FEMA).
Here’s what you should know about flood insurance, what it covers, how much it costs, and how to get a policy to protect your home.
Most people who buy flood insurance get it through FEMA’s National Flood Insurance Program.
Policies cover up to $250,000 in flood damage to buildings and $100,000 in flood damage to a building’s contents.
Most policyholders pay less than $2,000 per year for coverage.
Flood insurance covers damage to your home and belongings from a temporary influx of water affecting at least two acres of normally dry land or two or more properties. Traditional homeowners insurance and renters insurance policies don’t cover floods, so you’ll either need to get a stand-alone policy or an add-on to your existing policy if your insurer offers it.
The National Flood Insurance Program is America’s primary flood insurance provider. You can purchase NFIP flood insurance directly or through an insurance company in the NFIP network. But some private insurance companies offer their own flood insurance policies.[2]
The purpose of flood insurance is to pay for damage from water accumulation in your home, such as heavy rains, storm surges, and overflowing rivers and streams.
As a federally subsidized and managed program, the NFIP works differently from private insurers.
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FEMA manages the National Flood Insurance Program. You can buy a policy online through its NFIP Direct portal or through insurance companies that participate in the NFIP’s Write Your Own Program.[3]
The WYO Program allows insurers to offer NFIP standard flood insurance policies. Most flood insurance comes from WYO insurance companies, and coverage is identical to policies from NFIP Direct.
The NFIP offers two types of policies: building coverage and contents coverage. Building policies include up to $250,000 in coverage for a residential building with up to four units and individual condos within condo buildings. Contents policies include $100,000 in coverage for the contents of your home. These policies typically have separate deductibles.[4]
Flood insurance coverage is subject to a 30-day waiting period unless you’re buying it because your mortgage lender requires it or because of changes to your community flood map.
Flood insurance is also available for multi-family homes with more than four units, but policy limits differ.
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Building coverage reimburses floodwater damages, including:
The building and its foundation
Carpeting permanently installed over unfinished flooring
Detached garages
Electrical and plumbing systems
Fixtures that are permanently attached to walls, such as paneling, bookcases, and cabinetry
Heating, ventilation, and air conditioning systems
Refrigerators, stoves, and built-in appliances, such as dishwashers
Window blinds
Contents coverage reimburses damage to items kept inside your home, such as:
Carpet installed over wood flooring
Curtains and furnishings
Microwaves
Personal belongings, such as clothing and electronic devices
Washers, dryers, and portable and window air conditioners
Up to $2,500 in valuables, such as artwork
Like most other insurance policies, NFIP flood insurance has a deductible, which is the portion of a claim that you must pay out of pocket. If you opt for contents coverage, it’ll have a separate deductible from your building coverage.
Although flood insurance covers your home and its contents after an event that meets FEMA’s definition of flooding, that’s typically where coverage ends.
FEMA’s definition of flooding includes mudslides resulting from flooding, but NFIP policies exclude earth movement from other causes. And while the policies cover mold resulting from flooding, they exclude mold growth that you could’ve prevented.
Here are some other exclusions:
Business losses resulting from damage to your home
Cost of permits and licenses needed to tear down, rebuild, or remodel your home
Debris removal
Items outside of the structure of your home and other covered buildings
Living expenses while your home is being repaired or rebuilt
Sewer backup
Ask your insurance agent about optional endorsements you can add to your policy to cover these exclusions and give you more protection.
Flood insurance is a legal requirement only if you live in a high-risk area known as a Special Flood Hazard Area (SFHA) and have a mortgage backed by a federal agency, such as the FHA, VA, or USDA. But your non-government-backed lender can establish its own flood insurance requirements if you live in a designated SFHA.
Experts strongly recommend flood insurance for homeowners who live in high-risk zones, which FEMA describes as including any place with an annual flood risk of 1% or more. Those areas have at least a 25% chance of flooding during a 30-year period. FEMA flood maps can show the risk for your area.
You might benefit from flood insurance even if you live in an area with low or moderate risk. People in these areas are five times more likely to experience a flood than a fire within the next 30 years, according to FEMA.
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Flood insurance is typically cheaper than the average homeowners insurance premium. FEMA data shows that 37% of standard flood insurance policies cost $1,000 per year or less, and 32% cost between $1,000 and $2,000. The vast majority of policies (82%) cost $3,000 per year or less.[5]
The NFIP bases rates on many factors, and the risk of flooding is an important one. People who live in lower-risk areas can pay less than $400 per year for a flood policy.
Other rating factors include:
Your home’s age and how it was constructed
ZIP code
Elevation and distance from flooding sources
Coverage limits
Deductibles
Home’s replacement cost value
Homes with flood insurance premiums of less than $1,000 per year typically have a replacement cost value of $400,587, according to FEMA data.
You can buy flood insurance from the NFIP or a private insurance company.
Congress created the NFIP in 1968 because federal disaster assistance was the only resource for homeowners and tenants affected by flooding.[6]
Fifteen years later, FEMA began partnering with many well-known private insurers to launch the WYO Program and expand flood insurance availability and service. WYO Program insurance companies offer exactly the same coverage as policies you purchase through NFIP Direct.[7]
The NFIP reinsures 100% of coverage sold through WYO Programs. This ensures that companies can always pay flood insurance claims.
Private flood insurance is a policy purchased through a private insurance company outside of the NFIP and WYO programs. Some are stand-alone policies similar to an NFIP/WYO policy, but these typically have higher coverage levels. Others are “excess” policies you can add to your primary private or NFIP flood insurance policy.[8]
Private insurance companies might also use reinsurance to reduce their risk. California, Florida, and Texas are some states that secure reinsurance for private insurers.[9]
Find flood coverage to protect your home.
Your flood insurance needs depend on how much you could comfortably pay out of pocket to repair or rebuild your home and replace its contents after a flood.
If you have a government-backed mortgage loan that requires you to have coverage, or if your lender says it’s mandatory because you live in a high-risk area, the lender will tell you how much you need.
Otherwise, you can run some numbers to see how much coverage makes sense. Add up the estimated cost to rebuild your home and replace the contents. You may want to purchase enough to cover this entire amount.
If you need more than the NFIP maximum of $250,000 to cover your home’s structure or $100,000 to replace the contents, consider purchasing a private policy with higher limits or a policy add-on to increase your limits.
The more you know about flood insurance, the better prepared you’ll be to make an educated purchase decision. Here are the answers to some common questions about flood insurance.
FEMA doesn’t publish the average on its website. But 82% of NFIP policies cost $3,000 per year or less, and about two-thirds cost $2,000 or less.
It depends. It’s largely an individual decision based on your flood risk and your ability to pay for damages out of pocket. For many homeowners, even those in moderate-risk areas, flood insurance is worth it.
Not usually. Residential flood insurance isn’t tax-deductible unless you use a portion of your home for business, in which case you might be able to deduct a prorated amount. Flood insurance is deductible as a business expense for rental properties.
Yes, heavy rain is a covered source of flooding. But the accumulated water would have to cover two acres or at least two properties, including yours.
No. State Farm doesn’t offer its own flood insurance policies, but it recommends searching for an NFIP flood insurance partner.
Yes. You can compare rates for private flood insurance to find the best deal. If you want NFIP insurance, you don’t have to shop around because you’ll pay the same rate whether you get your policy from NFIP Direct or a WYO partner.
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Daria Uhlig is a seasoned writer and editor with more than a decade of experience creating personal finance content. She has been writing for Compare.com since 2024, and her work also appears in notable publications like USA Today, Nasdaq, MSN, Yahoo Finance, Fox Business, Credible, GOBankingRates, AOL, and Insurify.
As a licensed Realtor and resort property manager, Daria specializes in real estate topics, including landlord, homeowners, and renters insurance.
Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. With nearly a decade of experience writing and editing insurance and personal finance articles, his work has helped readers discover substantial savings on necessary expenses, including insurance, transportation, health care, and more. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.
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