Your home is most likely your biggest financial investment. As many people across the country have experienced, that investment can be washed away in minutes by a flood. But with flood insurance, you have the resources to recover.
Even if you rent your living space or own a condo, you may wish to buy flood insurance for your personal belongings, since renters and condo owners insurance won’t cover a flood loss. Contents coverage can be purchased without buying building coverage.
Flood insurance is an affordable protection, especially for those whose homes are in low-risk zones but are still near a dam, body of water, or storm drain. Flood insurance is also available for secondary or vacation homes. The Federal Emergency Management Agency (FEMA) has an online map which shows flood zones and dams. If you are outside a demarcated flood zone (for example, A or AE), you are considered at a low risk of experiencing a flood—but that doesn’t mean you won’t get flooded. Take, for example, Merrimon Ave. in Asheville, N.C. The street wasn’t in a flood zone, but it was near one, and it was inundated by floodwaters in Tropical Storm Helene in 2024. With flood insurance, those property owners could have had coverage for both their structures and their building contents.
FEMA defines a flood as “an excess of water on land that normally is dry.” That includes an overflow of inland or tidal waters, an unusual or rapid accumulation of runoff of surface waters from any source, mudflow (mud carried by water, not a landslide), and collapse or subsidence of shoreline land caused by a flood event.
Flood Insurance Backed by the Government
Because homeowners insurance doesn’t cover flood damage, the U.S. government offers stand-alone flood insurance to provide financial protection from flood losses from the National Flood Insurance Program (NFIP). It is a government-backed insurance plan that works through companies that are enrolled in the Write-Your-Own Program. If you have a mortgage and live in a designated flood zone, your lender might require you to buy flood insurance. You can also buy flood insurance from the private market. That is insurance that is not backed by the government, and it often provides substantially more coverage than NFIP’s policies.
A recent change for federally backed mortgages is that it allows homeowners to select Actual Cash Value (ACV)—which reduces the reimbursement for wear and tear—versus the previous requirement that stipulated full replacement cost for federally backed homeowners policies. The trade-off is lower premiums for ACV policies but with the risk that you will receive less if you suffer a loss. This is an important topic to have a conversation about with your insurance agent.
An NFIP policy can cover your structure for up to $250,000 and your home’s contents for up to $100,000.
Items Covered Under NFIP Building Coverage
What is insured under NFIP’s building coverage?
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Electrical and plumbing systems
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Foundation walls and anchor systems
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Furnaces and water heaters
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Kitchen appliances
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Wall-to-wall carpeting
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Built-in cabinets, wallboard and bookcases
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Window blinds
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Staircases
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Detached garages (limited to 10% of coverage limit)
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Fuel tanks, well water tanks and pumps
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Solar energy equipment
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Debris removal
What is insured under NFIP’s contents coverage?
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Personal belongings, such as clothing, furniture and electronics
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Curtains
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Washer/dryer
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Portable/window air conditioners
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Area rugs
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Valuable art or collectibles (max. $2,500)
NFIP has several exclusions to its flood policies, which are important to note. For example, outdoor systems, such as wells, decks, fences, sheds, septic systems, and pools are excluded from building coverage. You will also not be covered for temporary living expenses, such as hotel fees, while your property is restored. Additionally, the cost of upgrades to your home to comply with state or local building codes is not covered under an NFIP policy. Coverage for damage to basements varies based on your location and basement configuration. NFIP also has a 30-day waiting period between purchase of a policy and its activation, unless you are closing on a home or renewing an existing flood insurance policy.
An independent insurance agent can help you determine how much dollar coverage you should select. Your home may far exceed the values NFIP offers so private market flood policy might better meet your needs. Renters can also benefit from the advice of a flood insurance agent when it comes to assessing the level of contents coverage needed.
Flood Insurance for High-Value Homes
If your home is worth more than $250,000, consider private flood insurance. You can get considerably more in building and contents coverage as well as protection for basement contents, pools, and unattached structures in your yard. Coverage also can include payments to help with temporary living expenses while your home is repaired and replacement costs (instead of depreciated value) of personal contents. If you rent out the home you are insuring, you may also be eligible for loss of rental income.
Some homeowners choose to buy an NFIP policy but enhance it with excess flood insurance through a private flood insurer. Excess flood insurance kicks in when your NFIP limits of coverage are exhausted. These excess policies are often limited to single-family homes but can be written to extend the dollar coverage of NFIP Preferred Risk Policies (those for low-risk properties).
It may also be possible to simply buy a flood endorsement (or add-on) to your homeowners or condo insurance policy. It adds flood coverage to an existing residential property policy at NFIP levels or higher and may be available with no waiting period.
For owners of high-value homes who wish to have fast access to flood insurance payments, it may be possible to boost your post-flood cash flow with a parametric flood insurance policy. These policies set parameters (hence the name parametric) on floodwater depth in your location and often use on-site sensors to determine if coverage benchmarks have been hit, thereby triggering the automated payout. This type of policy is very limited in the United States, but an insurance agent can search the surplus lines market for availability. They are generally considered a complement to full home flood insurance but might be a partial solution for uninsurable properties.