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Erin Gobler is a personal finance writer and journalist who has been writing for Compare.com since 2023. With more than five years of experience personal finance experience, Erin has covered topics such as investing, credit cards, mortgages, insurance, and more.
Her work has been featured in major publications like Business Insider, Fox Business, and Time.
Erin received her bachelor’s degree from the University of Wisconsin-Oshkosh in 2013, studying journalism and political science. She also received a certificate of financial planning from Boston University in 2022.
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Matthew Gross is an editor at Compare.com. With a background in editing and SEO, he’s passionate about creating content that helps readers get the information they need to make more informed decisions. Prior to Compare.com, Matthew brought his user-centered approach to his work with global brands like Apple and Adobe.
Matthew graduated from Illinois State University, where he earned his bachelor’s degree in Journalism.
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While we make money through partnerships with some of the brands we discuss in our articles, our editorial team operates 100% independently, and these partners never influence or affect the topics, reviews, ratings, or recommendations we provide. We never guarantee favorable reviews or mentions in exchange for compensation from any brands or partners, and we uphold strict editorial standards to ensure our content is always independent, truthful, and unbiased.
Many people don’t realize that standard homeowners insurance policies don’t cover flood damage. And unfortunately, many homes in New Jersey are vulnerable to tropical storms and other flood hazards — especially in coastal cities.
But regardless of where you live, you might want to consider buying flood insurance. And depending on your home’s flood risk and the terms of your mortgage, your lender may require you to buy it.
Your flood insurance options include the National Flood Insurance Program (NFIP) and private insurers. But both options have their pros and cons.
Keep reading to learn more about how flood insurance works, the types of coverage available, and how to buy a policy.
Many New Jersey communities are at high risk of flooding, making flood insurance crucial.
You can buy flood insurance through the NFIP or a private insurer. While NFIP coverage is more widely available, private insurance may better protect you.
New Jersey homeowners pay more than the national average for flood insurance, so it’s important to shop around for quotes before buying a policy.
Whether you need flood insurance in New Jersey depends on where you live in the state. Many homes are in high-risk flood zones — especially along New Jersey’s coast.[1] [2] And depending on your mortgage, you may need flood insurance if you live in a high-risk area.
But even if you don’t live in a high-risk flood zone, it’s a good idea to still consider purchasing flood insurance. After all, New Jersey ranks No. 4 in the U.S. for NFIP claims, with an average payment of nearly $45,000 per claim.[3]
Flooding incidents in New Jersey have increased in the past decade, and unexpected weather events can hit even low-risk areas.[4] Hurricanes Sandy and Irene are just two examples of the extreme damage that’s possible in New Jersey.[5]
Compare rates from leading insurers.
New Jersey law doesn’t require homeowners to buy flood insurance, but federal law and mortgage lenders may require it. Make sure you know whether your home is in or near an area that’s at a high risk of flooding.
If you have a federally backed mortgage, federal law requires you to buy flood insurance if your home is in a special flood hazard area (SFHA).[6] Federally backed mortgages include loans from the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), or Department of Agriculture (USDA).
SFHA zones begin with either an “A” or “V” on FEMA’s flood risk map. The New Jersey Department of Environmental Protection also has a flood map you can use to identify the flood risk in your neighborhood.
Even if you don’t have a federally backed mortgage, you still might need flood insurance. Some mortgage lenders require flood insurance if your home is in an SFHA. Fannie Mae and Freddie Mac also require flood insurance in SFHAs.[7] [8]
FEMA has a handy tool that lets you enter your address and see if you’re in a designated flood zone. Check it out here.
FEMA categorizes flood zones as either low risk, moderate risk, or high risk, depending on how likely they are to flood. FEMA flood zones aren’t just for flood-prone areas, as every home falls into one of these designated zones.[9]
Here’s how the different flood zone designations vary.
Flood Zone Designation  | Flood Risk | Requirements |
|---|---|---|
| A | High | All federally backed mortgages |
| V, VE | High | All federally backed mortgages |
| B & X | Moderate | Some private lenders |
| C & X | Minimal | None |
| D | Undetermined | None |
High-risk zones: Homes in high-risk zones have a 1% chance of flooding each year and a 26% chance of flooding in the span of a 30-year mortgage. Zones A, V, and VE make up this high-risk category. You must have flood insurance for homes in these areas if you have a federally backed mortgage or if your lender requires it.
Moderate-risk zones: Zones B and X have a moderate flood risk. You don’t have to buy flood insurance if you live in one of these zones, but FEMA recommends it.
Low-risk zones: If you live in an unshaded section on a flood map, which includes Zones C and X, you’re at low risk of flooding. FEMA still recommends buying flood insurance, but many homeowners choose not to.
Undetermined risk: If you’re in Zone D, it means FEMA either hasn’t done a flood zone analysis or hasn’t determined your flood risk.
About 25% of flood insurance claims happen in low-risk or moderate-risk areas, according to FEMA. So it may be a good idea to buy a policy even if you don’t think it’s likely that your home will flood.[10] You can use FEMA’s Flood Map Service Center to find out what flood zone you’re in.
In 2023, New Jersey passed its flood-risk notification law, which requires sellers to disclose whether a home is in a high-risk flood area and whether it’s ever flooded. As a New Jersey homebuyer, this information can help guide you when you’re deciding whether to buy flood insurance.[11]
Depending on where you live, you may have the option to buy your flood insurance through the National Flood Insurance Program (NFIP) or a private policy. The NFIP is managed by the Federal Emergency Management Agency (FEMA), but individual insurance companies manage the policies.
To buy a policy through the NFIP, you must live in a community that participates in the program’s floodplain management requirements. Currently, more than 22,000 communities are part of the program, including more than 500 New Jersey communities.[12]
The table below breaks down some of the differences between NFIP and private flood insurance, including coverage limits, costs, waiting periods, and other benefits, according to Compare.com research.
Factor | NFIP | Private Flood Insurance |
|---|---|---|
| Coverage limits | $250,000 of building coverage $100,000 of contents coverage13 | Up to $1 million or more, but varies by insurer |
| Average costs | $953 per year14 | Varies by insurer |
| Waiting periods | 30 days, unless you have a federally backed mortgage | Up to 14 days, but varies by insurer |
| Additional benefits | Widely available | Replacement cost coverage Loss of use coverage |
NFIP policies are more widely available, but they also tend to be less robust. For example, they have lower policy limits, longer waiting periods, and fewer coverages than what most private insurers offer.
But while private policies offer more, they’re not available everywhere. Some of the most popular private flood insurance companies to consider include Neptune Flood, Aon Edge, and Chubb.
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The average cost of NFIP flood insurance in New Jersey is $953 per year, according to FEMA. That’s considerably higher than the national average of $786 per year.
The average cost of NFIP flood insurance for most ZIP codes in New Jersey is less than $1,000 annually, but some areas average more than $2,000 per year. For example, homeowners in several Bergen County ZIP codes pay the highest rates in the state, with average premiums of more than $3,200 per year.
FEMA implemented the Risk Rating 2.0 pricing model in 2023. Risk Rating 2.0 uses new data to accurately assess risk and determine insurance premiums.[13] With this new pricing structure, FEMA determines premiums based on several risk factors, including:
Frequency of flooding
Flooding types
Proximity to flood sources
Building characteristics
Private insurers may use other factors to set your premiums, including:
Elevation
Home construction
Coverage type and limits
Deductible
Claims history
Flood insurance usually includes building coverage and contents coverage. Building coverage pays for damage to your home, including its structure, appliances, permanently installed fixtures, detached garages, and more. Contents coverage pays for many, but not all, of your personal items in your home.
You typically have to buy your building and contents coverages separately and pay separate deductibles when you file claims.
Knowing what your flood insurance doesn’t cover is just as important as knowing what it does. Damages that your flood insurance policy won’t cover include:
Sewer backup: Food insurance won’t cover damage from a sewer backup if it’s the result of an issue inside your home. Coverage would only apply if the sewer backup happened because of a flooding event, like heavy rain.
Temporary living expenses: NFIP insurance won’t pay for temporary living expenses while you’re having your house repaired after a flood.
Outdoor property: Flood insurance covers buildings but not the rest of your property. For example, it won’t pay for damage to your deck or patio, swimming pool, fencing, or landscaping.
Valuable property: There’s a limit to the value of the property that flood insurance covers. NFIP insurance covers valuables up to $2,500, and it doesn’t cover financial assets like cash, precious metals, or stock certificates.
Personal property in basements: Your contents coverage protects most items in your home but not any personal items in your basement.
Vehicles: Flood insurance won’t cover vehicle damage due to flooding. You should file a claim through your auto insurance policy if a flood damages your car.
Business interruption: Your flood insurance won’t reimburse you for financial losses if flooding interrupts your business operations.
These coverages and exclusions specifically apply to the federal flood insurance program. If you have a private flood insurance policy, you might have additional coverage, such as loss-of-use coverage or higher coverage limits for valuables. You can check with individual insurers to find out what they cover.
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When shopping for flood insurance, you should shop around for coverage that fits your budget and coverage needs. Use this step-by-step guide to find the right policy:
Determine your home’s flood zone. If you’re in a high-risk flood zone, you should purchase coverage right away. Even if you’re in a low- or moderate-risk zone, flood insurance may still be a good idea.
Compare NFIP and private insurance. Consider whether the NFIP or a private policy is better for your situation. NFIP policies are more widely available, but private insurers can offer more protection and higher coverage limits. You can change your mind later, but be sure to check for any waiting periods before switching.
Choose coverage limits and deductibles. NFIP policies have limited coverage amounts, but private policies have higher limits. Make sure to choose a coverage limit and deductible you’re comfortable with.
Account for waiting periods. You’ll have to wait at least 30 days for your NFIP policy to take effect and around two weeks for a private policy. You should plan accordingly if you want to have your coverage in place before storm season.
Get multiple quotes. Your rates can vary from insurer to insurer, so don’t go with the first quote you get. Compare rates from a few different companies to find the best price for the coverage you need.
Protect your home at an affordable rate.
While shopping for flood insurance, you may want to work with a licensed New Jersey insurance agent. Agents are familiar with both the insurance market and the risks unique to New Jersey and can help you navigate the process.
If you’re looking to buy flood insurance in the Garden State, check out these answers to some common questions from New Jersey homeowners.
No. New Jersey doesn’t require flood insurance. But federal law requires homeowners with federally backed mortgages to have flood insurance if they live in high-risk flood zones. Depending on your location and lender, private lenders may also require you to have flood insurance.
No. Homeowners insurance doesn’t cover flooding in New Jersey. It’s important to buy flood insurance if you’re concerned about flood damage, even if you live in a low-risk flood zone.
The average cost of flood insurance in New Jersey is $953 per year for an NFIP policy. Private insurer policies have a wider variety of averages because they offer different coverages and policy limits.
Yes. You can buy flood insurance in New Jersey. If your community participates in the NFIP and enforces its floodplain management requirements, you can buy federal flood insurance. You can also shop for a private policy from an insurer offering them in New Jersey.
It depends. NFIP flood insurance takes effect 30 days after you buy your policy. Private insurers set their own terms, but most policies go into effect within two weeks of purchase.
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Erin Gobler is a personal finance writer and journalist who has been writing for Compare.com since 2023. With more than five years of experience personal finance experience, Erin has covered topics such as investing, credit cards, mortgages, insurance, and more.
Her work has been featured in major publications like Business Insider, Fox Business, and Time.
Erin received her bachelor’s degree from the University of Wisconsin-Oshkosh in 2013, studying journalism and political science. She also received a certificate of financial planning from Boston University in 2022.
Matthew Gross is an editor at Compare.com. With a background in editing and SEO, he’s passionate about creating content that helps readers get the information they need to make more informed decisions. Prior to Compare.com, Matthew brought his user-centered approach to his work with global brands like Apple and Adobe.
Matthew graduated from Illinois State University, where he earned his bachelor’s degree in Journalism.
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