Do I Need Flood Insurance & How Much Do I Need?

  • Flood
  • /
  • Do I Need Flood Insurance & How Much Do I Need?

Flood insurance is one of those coverages many people think they already have or think they don’t need. That is, until flooding occurs and they need to use that very same policy they just found out they don’t have.

A typical home insurance policy doesn’t cover flood damage. Although it does cover water damage in certain scenarios, policyholders should know there’s a significant difference between damage from a flood and damage from another water source.

Aside from knowing what flood insurance covers, what your options are for securing a policy and knowing whether or not you need coverage — and how much of it you need — is crucial to your family’s financial wellbeing.

This article details everything you need to know about securing a flood insurance policy to protect your home and your belongings.

Do I Need Flood Insurance?

Although flood insurance isn’t required in every situation, you certainly need flood coverage in a boatload of situations. We highly recommend you purchase a flood insurance policy if you live in one of FEMA’s designated flood zones. Their interactive map tells you status quickly if you’re in that zone.

Since flooding is caused by melting snow, harsh windstorms and rainstorms, as well as overflowing rivers, ponds, lakes and creeks, many areas in the United States are within some designation of a flood zone nowadays.

Flood insurance is an easy policy to purchase that can be added to homeowners, renters and condo insurance policies. It usually costs homeowners around $400 per year and much less for renters.

You’ll need to purchase a flood policy well before the rainy or storm season starts because policies take must go through a 30-day waiting period before going into effect.

How Much Flood Insurance Do I Need?

Everybody needs a different amount of flood insurance coverage, but you need as much coverage as your home and belongings are worth.

So if your home is worth $250,000 and you own $30,000 worth of belongings (TVs, lawnmowers, electronics, etc.), you need a policy that insures your home for $250,000 and your belongings for $30,000.

You have two options for flood insurance: private or government.

The government’s National Flood Insurance Program policies max out at $250,000 for residential properties and $500,000 for commercial properties. It also only provides replacement cost coverage, which pays up to the maximum amount it costs to rebuild your home — not the current market value.

Your best bet is going with a private flood insurer because they offer policies for all prices of homes and provide market value policies, which pays the full market value of your home (the cost a potential home buyer would pay for your home) if it were destroyed.

When Is Flood Insurance Required?

If you have a mortgage from a federally regulated or insured lender and you live in a high-risk flood zone, as designated by FEMA, you are required to maintain adequate flood insurance coverage to protect your home.

Even if you don’t live in a high-risk flood zone, mortgage lenders can require you to maintain adequate flood coverage to protect their investment.

That’s it, though. Most homeowners in the United States are not required or mandated by law to maintain flood insurance on their home. That’s simply an extremely poor thing for homeowners, especially since floods are becoming more common each year.

Is Flood Insurance Worth It?

Yes. YEs. YES! Flood insurance is worth every penny you spend! FEMA estimates that 25 percent of flood claims occur in a home that isn’t required to maintain flood insurance coverage. Many people don’t realize that floods are the most common natural disaster in the United States year after year.

Consider this: just 1 inch of flooding in an average home can cause $25,000 worth of damage. Do you have $25,000 lying around and waiting to jump out of your bank account for a flood? Probably not. Even if you did, who really wants to pay $25,000 for something that could’ve been avoided?

Do you have $400 to $700 to invest in a flood insurance policy each year to ensure your home and family aren’t displaced or incapacitated by a flood? You should invest that money — because that’s the yearly average of flood insurance policies in the U.S.

Just think about it. Even if your flood insurance policy costs $700 per year, that’s some solid peace of mind to make sure you don’t wind up footing a $25,000 bill.

That means, paying $700 per year, you could have one flood in 35 years and flood insurance would pay for itself ($700 x 35 years = $24,500). If you have two or more, your yearly premiums have already paid their dividends in full.

Can You Get Flood Insurance in a Flood Zone?

Yes, from low-risk to high-risk zones, you can get a flood insurance policy if you live in a flood zone. If you live in a high-risk zone, FEMA’s National Flood Insurance Policy cannot deny you coverage.

Although if your home is valued at more than $250,000 or you’d like a market value policy, we highly recommend getting flood insurance with a private company.

If you live in a high-risk flood zone, it may be more expensive and tougher to find a company to insure you. If you live outside of a high-risk zone, you should be able to find an affordable policy from many insurance companies.

Stay Above Water With Flood Insurance

Do you want to pay for costly and common flood damage yourself or have an insurance policy pick up the tab?

The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.

Scroll back to Top