5 Things to Know Before You Buy Flood Insurance

Flood insurance is an important policy for most homeowners to have. But only about one in seven homeowners purchase this safety net.

In this article, we’ll take a look at what flood insurance is, how much it costs to buy coverage and where you can buy a policy.

Here’s What You Need to Know About Flood Insurance

According to a 2018 survey from the Insurance Information Institute, an insurance industry association, only 15% of homeowners across the country said they had a flood policy. Here are five things you need to know about this important policy:

1. What Is Flood Insurance?
2. What Does Flood Insurance Cover?
3. How Much Does Flood Insurance Cost?
4. How Long Does It Take to Get Flood Insurance?
5. Where Can I Buy Flood Insurance?

1. What Is Flood Insurance?

Flood insurance is a specialized policy that protects your home and belongings against damage from floodwaters.

You may wonder whether you really need a flood policy. But here’s the thing: Flood damage is typically not covered under your home insurance policy.

And if you live in a high-risk flood area and have a mortgage, your lender may require you to have a flood policy through FEMA’s National Flood Insurance Program (NFIP).

To find out whether you live in a high-risk flood area, you can go to FEMA’s website and type in your street address.

But even if you live in an area with low or moderate flood risk, you may still want to buy a policy. Here’s why: According to the NFIP, a single inch of floodwater in your home can cause $25,000 of damage to your property.

What you don’t want is to find out after a flood that you’re not covered under your home insurance policy. Because by then it’s too late. The potentially extensive damage is already done.

2. What Does Flood Insurance Cover?

Flood insurance covers a lot of things, as we share in the chart below.

Flood Insurance Coverage
Included	Excluded
Your home and its foundation Electrical and plumbing systems HVAC equipment Home appliances Carpeting Wallboard Paneling Bookcases Cabinets Blinds and curtains Clothing Electronics Frozen contents of your freezer Cisterns and the water in them Fuel tanks and the fuel in them Permanent carpeting over unfinished flooring Select valuables up to $2,500	Precious metals Stock certificates Bearer bonds Cash Trees and plants Wells Septic systems Walkways Decks and patios Fences Hot tubs and pools Boat houses Retaining walls Storm shelters Temporary housing costs Loss of income Damage to vehicles Mold damage after a flood and sewer backups

Additional resource: Check FloodSmart.gov for more details of what is and what isn’t covered under flood insurance.

Coverage limits on policies sold through the National Flood Insurance Program cap out at $250,000 for a building and $100,000 for its contents.

But note that there are certain circumstances where something that might normally be covered isn’t — depending on how the flooding happens.

For example, sewer backup is covered only when it’s a direct result of flooding. If it’s the result of some other issue, then it’s not covered — even though the sewer backup floods into your home just the same.

3. How Much Does a Flood Policy Cost?

The average flood insurance policy runs about $700 annually, according to FEMA. But that’s just an average. If you live in a low-risk area, a policy could cost hundreds less.

In fact, if you don’t live in a high-risk flood area, you may qualify for what’s called a Preferred Risk Policy. Premiums on those kinds of policies can be lower than $200 annually.

In 2019, we priced flood coverage on the GEICO website for a single-family condominium unit in metro Atlanta, built in 2000 on a slab foundation.

As you’ll see, there are two types you can buy: Coverage for the building and contents or the contents only.

The highest level of NFIP coverage ($250K for the house and $100K for its contents) cost $534 in our sample quote. But other factors can either drive that quote up or down. Those factors include:

• Year and type of construction
• Type of foundation
• The presence of additions or extensions on the property
• Whether or not you have an attached garage
• Number of floors
• Building occupancy
• Location of your home’s contents

In our case, being built on a slab with no basement meant our final quote was lower than expected thanks to a $58 foundation savings discount. That lowered the annual premium down from $534 to $476.

Important: Here’s Why There’s No Need to Shop Around for Flood Insurance

Unlike other kinds of insurance, it actually doesn’t pay to shop around for a flood policy.

“National Flood Insurance Program (NFIP) flood insurance rates do not differ from company to company or agent to agent. All policy premiums include certain fees and surcharges, so ask your agent about these when discussing a price quote.”— FloodSmart.gov

While many insurers require you to talk to a local agent to get a quote, we found a couple of big-name insurers that make it possible to get a quick quote online, including GEICO and Progressive.

Deductibles apply to all policies purchased through the NFIP. Be sure to ask about your quoted deductible before purchasing a policy.

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Editor’s note: Coverage is available beyond the NFIP 250/100 limits, but you’ll have to get it on the private market. Private policies typically have a 14-day waiting period, with caps set at $500,000 for building and $250,000 for belongings.

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4. How Long Does It Take to Get Flood Insurance?

The thing about a flood insurance policy is that you can’t wait until you need it to buy it.

Coverage typically doesn’t become effective until 30 days after you purchase the policy. So if you wait for a Superstorm Sandy or a Hurricane Katrina to be on your doorstep, it’s already too late.

There are only a couple of exceptions to the 30-day rule:

• There’s no waiting period if the policy is obtained in connection with a loan, like when you purchase a new home and the closing is in less than 30 days.
• If a change to the Flood Rate Insurance Map places your home in the “Special Flood Hazard Area (SFHA)” for the first time, you can get a policy with only a one-day waiting period within 13 months of the new map’s effective date.

5. Where Can I Buy a Flood Policy?

As a starting point, you’ll probably want to call your existing home insurer and see if it writes flood insurance policies through NFIP. Not all insurance agents offer the policies, but you’ll find that thousands of them across the country do.

If you have no luck with your existing home insurer, then continue your search for a policy through FloodSmart.gov — the official website of the NFIP that serves as the main clearinghouse for government-underwritten flood policies.

When you follow this link, just select your state from the drop-down menu and you’ll likely find dozens of options near you.

If you have difficulty locating a convenient agent, contact the NFIP Help Center at 800-427-4661.

Final Thought

Even if you live in a 100-year flood plain — which means that statistically, a catastrophic flood will happen only about once a century — it’s still a good idea to have a policy.

According to the NFIP, more than 20% of flooding claims come from areas that are not technically high risk.

Meanwhile, while we’re on the topic of insurance, be sure to check out our complete guides to the best and worst auto insurance companies and the best and worst home insurance companies!