New Jersey Flood Insurance

Nestled comfortably on the Atlantic Ocean, New Jersey offers an abundance of popular attractions and outdoor activities. This coastal state also has its share of floods caused by hurricanes and storm surges, so it is important for New Jersey residents to understand the importance of flood insurance. 

With ten coastal communities facing the turbulent and unpredictable Atlantic Ocean, many who reside in this area must protect their homes, possessions, vehicles, and businesses with flood insurance. The average cost of flood insurance in New Jersey is $950 per year, and it is well worth it if you experience costly flood damage. 

An independent insurance agent can help you find New Jersey flood insurance. 

Companies That Offer Flood Insurance in New Jersey

Flood damage is specifically excluded from the coverage provided by conventional insurance policies like home insurance, renters insurance, and business insurance. According to the Federal Emergency Management Agency (FEMA), however, just one inch of rainwater in your home can cause as much as $25,000 in damage. When flooding is severe and widespread, the resulting property damage can be overwhelming. 

That is why the federal government stepped in in 1968 and created the National Flood Insurance Program (NFIP). This program provides affordable coverage to people at risk of sustaining flood damage. 

With that program, flood insurance is guaranteed. You cannot be turned down due to being in a high-risk location, nor will your rates go up if you have filed a claim. 

You can buy flood insurance in New Jersey in one of two ways: 

• NFIP: Congress created the National Flood Insurance Program (NFIP) in 1968 to help provide a way for property owners to financially protect themselves from flood damage. Flood insurance from the NFIP is available to homeowners, renters, condo owners, and business owners in communities that participate in the program. The NFIP is a government-backed program, which means its rates are the same regardless of where you buy coverage. The NFIP partners with over 50 insurance companies and thousands of independent insurance agents nationwide to offer flood insurance. 
• Private flood insurance: You can purchase private flood insurance in Florida as an alternative to the NFIP. Flood insurance from private insurance companies may be cheaper and faster to get than policies from the NFIP, which come with a 30-day waiting period for coverage to begin. Private flood insurance may also provide higher coverage limits. Conversely, a private insurance company can cancel your policy if your home is deemed too risky, whereas an NFIP policy cannot be canceled for that reason. 

Here are some top insurance companies in New Jersey that offer private flood insurance:

• Progressive
• REInsure Pro
• Pacific Specialty Insurance Company
• Kingstone Insurance Company
• Selective Insurance

What Does Flood Insurance Cover In New Jersey?

Flood insurance from the NFIP consists of two types of coverage that reimburse you for physical damage to your property: building/structural coverage and contents coverage.

If you are a renter, you’ll only need to purchase contents coverage since your landlord will be responsible for fixing damage to the structure of the home. If you are a landlord, you will need much less contents coverage since your tenant will be responsible for covering their own belongings.  

For homeowners, policies can be purchased with limits up to $250,000 for the building and $100,000 for the building contents. These are typically purchased separately with separate deductibles.

Business owners can purchase up to $500,000 in building coverage and $500,000 in contents coverage. These are typically purchased separately with separate deductibles. 

• Building/structural coverage protects:
  • The insured building and its foundation
  • Electrical and plumbing systems
  • Furnaces and water heaters
  • Refrigerators, cooking stoves, and built-in appliances like dishwashers
  • Permanently installed carpeting
  • Permanently installed cabinets, paneling, and bookcases
  • Window blinds
  • Foundation walls, anchorage systems, and staircases.
  • Detached garages
  • Fuel tanks, well water tanks and pumps, and solar energy equipment
• Contents coverage protects:
  • Clothing, furniture, and electronic equipment
  • Curtains
  • Portable and window air conditioners
  • Portable microwave ovens and portable dishwashers
  • Carpets that are not included in building coverage
  • Clothes washers and dryer
  • Food freezers and the food in them
  • Certain valuable items, such as original artwork and furs, up to $2,500

You will want to buy enough coverage in each category to suitably cover your property. A local independent insurance agent can help you find flood insurance in New Jersey.

What Does Flood Insurance Not Cover in New Jersey? 

As with any insurance policy, flood insurance has some limitations. This means that not all flood-related damage is covered. Some things your policy will most likely exclude from coverage include: 

• Damage caused by moisture, mildew, or mold that the property owner could have avoided
• Currency, precious metals, and valuable papers such as stock certificates
• Property and belongings outside of an insured building, such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs, and swimming pools
• Living expenses such as temporary housing
• Financial losses caused by business interruption or loss of use of the insured property
• Cars and other vehicles and their parts
• Personal property kept in a finished basement

In addition to these exclusions, coverage for basements and areas below the lowest elevated floor is limited. These exclusions may apply to basements, crawl spaces, walkout basements, and enclosed areas under certain types of elevated buildings. 

It’s important to understand the limitations of your New Jersey flood insurance policy before disaster strikes so you don’t have to deal with any unpleasant surprises. An independent insurance agent can help explain your coverage to you. 

Is Flood Insurance Required In New Jersey? 

If you have a mortgage on your property and it is located in a FEMA-designated flood zone, your lender will likely require you to cover it with flood insurance until your loan is paid in full. Otherwise, flood insurance is optional. 

Whether or not you are required to carry flood insurance, it is usually a good idea even if your home or business is in a low-risk area. In fact, according to FEMA, from 2014 to 2018, policyholders outside of high-risk flood areas filed over 40% of all NFIP flood insurance claims and required one-third of federal disaster assistance for flooding.

Around 27% of all properties in New Jersey are at risk of sustaining flood damage. However, not all are covered by flood insurance. 

• Number of NJ properties at risk for flooding: 629,283
• Number of NJ properties covered by flood insurance: 231,960

Heavy rainfall is often a cause of flooding in New Jersey. New Jersey has more than the national average annual rainfall. 

• U.S. average annual rainfall: 30.21 inches
• NJ average annual rainfall: 47.1 inches

An independent insurance agent can help you understand your risks and need for flood insurance in New Jersey. 

Average Cost of Flood Insurance In New Jersey

The NFIP traditionally used a standard calculation for flood insurance across the United States. Premiums for flood insurance were based on:

• Flood risk for your property (your flood zone)
• The type of coverage you purchased (just building coverage or building and contents coverage)
• The deductible and amount of coverage you need
• The location, design, and age of your home
• The location of your home’s contents 
• Whether or not your house has a basement

Risk Rating 2.0: Equity in Action, FEMA’s new flood rating system, uses a variety of flood risk data to set premiums based on each property’s individual risk rather than the risk for an entire community or neighborhood. 

The previous methodology set rates based on geographic zones and elevation. Risk Rating 2.0 uses the following factors to set flood insurance rates:

• Likelihood of your home flooding from various sources (flash flooding, floods caused by waves or high-water levels, coastal erosion, and more)
• Characteristics of your home (foundation type, first-floor elevation, etc.)
• Your home’s elevation and distance from flooding sources (coasts, rivers, lakes)
• Replacement cost value of your home’s structure (cost to rebuild after a disaster)
• Elements of your home designed to help it withstand floods, such as flood vents
• Nearby or relevant levee performance

On average, homeowners in New Jersey pay about $950 per year for flood insurance. This is about 30% higher than the national average. Depending on the flood risk for your home, you’ll pay more or less than the average for flood insurance in New Jersey. 

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Average New Jersey Flood Insurance Costs by City

New Jersey flood insurance costs are highly reliant on the real flood risk for a specific county, city, neighborhood, or individual home. It’s pretty simple: the higher the flood risk in an area, the higher the flood insurance cost. 

There is a wide range of average flood insurance costs across the state of New Jersey. Jersey City has the lowest average flood insurance cost on our list ($448 per year), while Passaic has the highest cost on our list ($3,161 per year).

Here’s a list of average annual flood insurance costs in New Jersey by city. 

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Reducing New Jersey Flood Insurance Costs

There’s not a lot you can do about the flood risk where you live in New Jersey, and you certainly aren’t going to prevent tropical storms and hurricanes. However, there are a few things you can do to find the best flood insurance rates. 

• Compare quotes from the NFIP and private flood insurance companies. You may find private flood insurance is cheaper.
• Choose a higher deductible. Higher deductibles lower the cost of your flood insurance policy. 
• Upgrade or retrofit your home to better protect it from flooding. Make sure your living spaces are elevated, and be sure to check the base elevation rate for your area to determine how high your space should be. Having an appropriately elevated living area can help lower flood insurance premiums. 
• Elevate utilities such as the air conditioner, water heater, and furnace. Ensure your foundation has flood water openings so water can be drained out immediately in the event of a flood. This not only better protects your home from flood damage, but it might also help you save some money on your flood insurance premiums.
• Get an elevation certificate. This is a document that outlines the flood risk for your property, with information like your flood zone and the height of your lowest floor. Elevation certificates will no longer be required under FEMA’s new risk rating methodology, Risk Rating 2.0. However, a property owner can still submit one to determine if it will lower their cost of insurance. 

An independent insurance agent in your area can help you learn more about flood insurance savings, whether you’re purchasing NFIP flood insurance or private flood insurance. 

New Jersey Flood Insurance FAQs

Where Can I Find Flood Insurance in New Jersey?

Independent insurance agents in New Jersey can help you find flood insurance. A local agent can help you compare policies and costs from the NFIP and private insurance companies that operate in your area. 

Find an independent insurance agent near you to get more information and start reviewing quotes for New Jersey flood insurance.