Do You Need Flood Insurance?

If your house is located in a high-risk flood area and you have a mortgage from a bank or a federally backed lender, flood insurance is mandatory. If your house is in a low-risk area, purchasing flood insurance is up to the homeowner's discretion.

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How do I know if I need to buy flood insurance?

The Federal Emergency Management Agency (FEMA) publishes and updates the National Flood Insurance Program (NFIP) flood hazard maps to determine risk and pricing. If your property is shown in Zone V or Zone A on the flood hazard map, it falls into a Special Flood Hazard Area (SFHA). FEMA defines this as having a more than 1% chance of flooding each year, which translates to a greater than 1-in-100 chance of flooding in any given year. A "100-year flood" does not mean a flood only occurs once every 100 years.

If your home is in Zone X, it is classified as a low-risk zone. Low risk does not mean there is no risk of flooding; according to FEMA reports, 20% of homes damaged by floods are located in low-risk areas. Furthermore, flood risk zones are continuously updated every year based on actual conditions. Your home might be in a low-risk zone this year, but it could be reclassified into a high-risk zone next year.

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What does flood insurance cover?

Flood insurance is divided into building property coverage and personal contents coverage. Homeowners can choose to purchase building and contents coverage separately, buy just one of them, or purchase them both together. As a reminder, flood insurance generally does not cover losses caused by water backing up from sewers; sewer backup coverage is usually purchased as an endorsement to a standard homeowner's insurance policy.

• Building property coverage includes: The building itself, the foundation, electrical and plumbing systems, central air conditioning equipment, heating systems, and water heaters, as well as built-in appliances like refrigerators, stoves, and dishwashers. Additionally, permanently installed carpeting, permanently installed paneling, wallboard, bookcases, cabinets, and window blinds are also included.

• Personal contents coverage includes: Personal belongings, clothing, furniture, electronic equipment, curtains, window air conditioners, portable microwaves, dishwashers, washing machines, dryers, valuable items (up to a maximum payout of $2,500), and food in the refrigerator.

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What is NOT covered by flood insurance?

Cash, stocks, and precious metals are not covered. It also does not cover moisture or mold damage that could have been avoided by the homeowner or that was not caused by a flood. Temporary housing expenses during home repairs, and items outside the home—such as trees, patios, swimming pools, fences, and motor vehicles—are excluded. Finally, business losses resulting from a flood are not covered.

Flood insurance can cover up to $250,000 for the building property and $100,000 for personal contents. If your community participates in the Community Rating System (CRS), residents can enjoy discounted premiums: premiums in high-risk flood areas can be reduced by up to 45%, while those in moderate or low-risk areas can receive up to a 10% discount.

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When does flood insurance take effect after purchase?

Flood insurance generally has a 30-day waiting period. Losses caused by floods during this waiting period will not be covered. Therefore, it is important to prepare and purchase flood insurance early.

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