Rain is pouring, the water outside is rising, and your home starts to flood. You’re helpless. All you can do is watch from higher ground as your home and belongings get soaked and destroyed or ride out the storm elsewhere and pray the damage isn’t too bad. If you don’t have flood insurance, you’re also worrying about the financial damage—the cost of rebuilding, repairing your home, and replacing belongings.
Floods are homeowners’ worst nightmare. They’re a mess and there’s little you can do to fend off mother nature when a flood hits. However, flood insurance can protect you financially and help you recover. In this article we will explain the importance of flood insurance and answer some of the most frequently asked questions about flood insurance.
Do I need flood insurance?
If you have a home or a business, you should strongly consider having flood insurance. Dams burst, snow melts, natural disasters strike—floods can happen anywhere—even in the mountains, far from the ocean, as we witnessed with the devastating floods of Hurricane Helene in Appalachia.
In fact, those who consider their homes or businesses to be low-risk and therefore do not have flood insurance, are arguably the most vulnerable to disastrous flooding because they are not physically prepared or financially protected.
While everyone is at risk and should have flood insurance, there are certain factors that can make property high risk for flooding.
- Proximity to bodies of water
- Low-lying properties: this doesn’t just mean elevation, if your property is in a valley or at the bottom of a hill, water is more likely to flow your way.
- Homes located in floodplains/flood zones (more on this later)
- Historical data shows frequent flooding in the area
- Areas with poor drainage: this includes changes to drainage patterns caused by construction.
- Structural characteristics such as basements, crawl spaces, and foundations below ground level increase flood risk.
- FEMA Flood Zones
A Growing Trend: Houses Built on Floodplains
In recent decades urban populations have grown substantially. Growing cities need more housing, land is scarce, and floodplain property is cheaper. As a result, developers are building in flood zones despite the risk it poses to the people who purchase these homes. Between 2001 and 2019, 2.1 million acres of floodplain land were developed, and 844,000 residential properties were built on floodplain. If you are in the market or live in a new development, do your research and know that flood insurance is always a good idea, but if you’re in a flood zone, you need to act now.
Does homeowner’s insurance cover floods?
No! Homeowner’s insurance does not cover flooding. While homeowner’s insurance may cover internal sources of water damage such as burst pipes (policies vary), it will not cover flooding from external sources (natural disasters, storm surges, overflowing rivers etc.). You need a separate flood insurance policy to protect your home and belongings against flooding.
What does flood insurance cover?
Flood insurance covers physical damage to your property caused by a flood. This includes building coverage and contents coverage. Let’s take a closer look at both.
Building Coverage: Covers damage to the physical building structure. Building coverage includes, but is not limited to, the following.
- The insured building & foundation
- Electrical, plumbing, central HVAC equipment, furnaces, water heaters
- Built-in appliances: refrigerators, stoves, dishwashers
- Permanently installed carpeting, cabinets, paneling, bookcases
- Window blinds
- Walls & Staircases
- Garages
- Fuel tanks, water tanks, solar energy equipment
Contents Coverage: Covers damage to belongings inside your home or business directly caused by the flood.
- Clothing
- Furniture
- Electronics
- Portable appliances: washers, dryers, microwaves, freezers, portable air conditioners
- Certain valuable items (ex: artwork)
- Etc.
As with any type of insurance, policies vary greatly in terms of what is covered and the amount of coverage.
How much does flood insurance cost?
Flood insurance is probably more affordable than you think! The average annual cost of flood insurance in the US is $818-$949 which comes out to just $68-$79 per month. Renters only need contents coverage. The NFIP (the federal program that provides the majority of flood insurance) offers renters flood insurance policies as low as $99/year ($8.25/month). Considering that just one inch of water can cause $25,000 worth of damage to your home, flood insurance is well worth the price.
The Risk of Relying on Government Disaster Assistance
“The government offers disaster assistance to flood victims, why would I need flood insurance?”. It’s a common question. Let’s dive into the reasons why relying on government disaster assistance is a risky decision.
1) Presidential Declaration of Major Disaster Required
Disaster assistance is not automatically triggered when a flood occurs. The only way that FEMA can step in and provide federal disaster assistance is if the president declares the flood a major disaster. A flood may cause significant damage and seem like a “major disaster” to you and your community but still does not meet the criteria for a presidential declaration.
2) Limited Aid
Government assistance programs such as the Individuals and Households Program (IHP) do not replace insurance. Their goal is to make your home safe, sanitary, and livable, not to fully repair it and restore it to its previous condition. From 2016-2022, the average FEMA disaster assistance grant amount was only $3,000. During the same timeframe, $66,000 was the average claim amount for those who had flood insurance through the National Flood Insurance Program.
3) Assistance is often a loan, not a grant
The most common type of disaster assistance is a low-interest loan rather than a grant. These loans come from the Small Business Administration and must be repaid with interest, which can be challenging to afford on top of normal expenses such as your mortgage. For businesses, it can be especially challenging given the fact that a disastrous flood will likely interrupt your business’s operations and income.
4) Delays and Bureaucracy
Applying for disaster assistance can be complicated. Filling out the proper paperwork, undergoing inspections, and waiting for approval (or rejection) can be a lengthy process. If you choose to solely depend on disaster assistance, funds may not arrive in time to address your immediate needs.
5) Disaster Assistance is not a Substitute for Flood Insurance
FEMA explicitly states that disaster assistance is not a substitute for flood insurance. Disaster assistance is there to help in extreme cases. Additionally, even if you are insured you may be eligible to receive disaster assistance in certain situations.
How to Get Flood Insurance
Flood insurance can usually be purchased through your current home or auto insurance agent. There are two options for flood insurance—NFIP policies and private policies. Check with your agent to see what they offer and explore other insurance agencies in your area if they can’t provide what you need.
National Flood Insurance Program (NFIP) Coverage
Managed by the Federal Emergency Management Agency (FEMA), the National Flood Insurance Program (NFIP) offers reliable flood insurance to both homeowners and businesses nationwide. Its policies, backed by the federal government, are the most widely used flood insurance option. For residential properties, the NFIP provides up to $250,000 for building coverage and $100,000 for contents. Commercial properties can secure up to $500,000 for both building and contents coverage. NFIP policies are easily accessible. Many insurance agencies participate in the NFIP and can connect you with coverage.
Private Flood Insurance
Private flood insurance is available through several private insurance companies. The reasons that some people choose private flood insurance over an NFIP policy are higher coverage limits, and additional coverage features. Some private insurance companies offer $1 million plus in flood coverage. Coverage features such as living expenses (if you must evacuate your home), coverage for pools and detached structures, and coverage for belongings in basements are only available through private policies.
Get a Personalized Flood Insurance Quote through Inter-Agency
Find the right flood insurance policy with the help of Inter-Agency. Inter-Agency is an independent insurance agency based in Knoxville, TN. We offer a wide range of commercial insurance and personal insurance policies, including flood insurance, to clients in 35+ states. As an independent insurance agency, we are your advocates in the insurance world. When you work with Inter-Agency, you will experience peace-of-mind in knowing that you’re protected and that we did our due diligence to find you the best price.
We are proud participants in the National Flood Insurance Program. Contact us to learn more about NFIP flood insurance policies or get a flood insurance quote online today.