Just one inch of water in a home can cause up to $25,000 in damages, according to the Federal Emergency Management Agency. If you’re assuming homeowners insurance will pick up the tab, you may be in for a surprise. Payment for that costly clean-up bill may end up coming out of your wallet.
Many homeowners have learned the hard way that standard homeowner, condo, and renter’s insurance policies don’t cover flood damage. Hurricane Helene damaged an estimated 300 homes in Buncombe County, N.C., in 2024. Fewer than 1% of the homes and businesses had flood insurance, according to the Insurance Information Institute (Triple-I).
Nationwide, only about 4% of American households have a flood insurance policy. That's especially troubling given that the catastrophic flooding events in the U.S. are becoming more frequent and severe. “Americans are at risk of flooding, no matter where they live,” says Mark Friedlander, a spokesperson at Triple-I. “Lack of flood insurance is the largest insurance gap in the U.S.”
Is Buying Flood Insurance Required or Optional?
Homeowners who live in a high-risk flood zone, as defined by FEMA, are required to get flood insurance if they’re getting a government-backed mortgage. However, flood insurance is optional for those who don’t have a mortgage or don’t live in a so-called “high-risk area.” These homeowners must decide their risk tolerance and whether they need flood insurance, says Bill Leininger, a broker-owner of Dean and Leininger Real Estate in Bigfork, Mont. He is also a former chair of the National Association of REALTORS® Insurance Committee.
“Many people think if they don’t live in a coastal area like Florida, they don’t need flood insurance,” Leininger says. Yet, flooding events often occur beyond precise bounds, like the ones shown on a flood map.
Properties With Flood Risk
Indeed, the purpose of FEMA’s widely used flood maps isn’t to show your property’s individual risk and whether you need flood insurance, says Austin Perez, senior policy representative for the NAR. Perez has long served as an advocate for greater flood protection for homeowners. He says FEMA maps often don’t account for inland flooding caused by heavy rainfall and don’t represent all areas.
Furthermore, an average of 40% of the claims processed by the National Flood Insurance Program — a federal program that sells flood insurance — come from FEMA high-risk flood zones.
More than 24 million properties in the U.S. are estimated to face flooding risk over the next 30 years, according to the First Street Foundation. Those properties aren’t solely located along the major rivers or the coastline mapped by FEMA. Heavy rainfall, melting snow, ice dams, drainage system backups, or even broken water mains can also cause flooding. There are ways you can weatherproof your home and yard to reduce damage. Some of the risk is beyond your control, however.
Gauging Your Flood Risk and Need for Flood Insurance
Is your home or the one you’re looking to buy at risk? Here are some resources to check:
- Flood Factor: This online tool can show how likely a property is to flood. The likelihood is based on scores of one to 10. (The higher the number, the greater the flooding risk.) The tool accounts for rainfall, rising sea levels, and the local area to predict future flooding risk over 30 years.
- FloodSmart: This site, offered by the NFIP and run by FEMA, aims to help homeowners understand the cost of insuring an individual property for flood risk. You can get an online rate quote from the site or find a flood insurance agent (with no commitment).
- Realtor.com: This tool combines access to FEMA’s flood zones and Flood Factor, and allows you to search specific addresses to help gauge flood risk.
- CoreLogic Flood Risk Report: The report pulls from various data sources to provide a comprehensive risk assessment, factoring in historical flooding events, flood frequency and severity, type of flooding, and an area’s elevation data. It also predicts flooding risk.
FAQs About Flood Insurance
After learning about the basics, you likely still need answers to questions before investing in flood insurance. Here are some common questions:
Does Homeowners Insurance Cover Flooding?
Standard home insurance excludes flood damage, such as from storm surges, flash floods, rising rivers, or heavy rain.
Which Flood Zones Require Flood Insurance?
You're required to have flood insurance if you have a federally backed mortgage, such as a Federal Housing Administration or Veterans Affairs loan, and live in a high-risk flood zone, as determined by FEMA’s flood insurance rate maps.
Where Can You Get Flood Insurance?
Homeowners can typically purchase flood insurance through the NFIP if their community is eligible or through private flood insurance companies. NFIP is the most common source. But the program does face challenges. In fact, Congress must reauthorize the NFIP by Sept. 30, 2025. Private insurers write about 10% of U.S. flood policies. This may be an option for homeowners seeking higher coverage limits and additional policy options, like additional living expenses. This would help pay for extra costs like hotel bills while a home is being rebuilt.
What Does Flood Insurance Cost?
Costs can vary based on property-specific flood risk factors. They include distance to water, property elevation, the home's age and construction, coverage and deductible options, and cost to rebuild the home. The highest-cost policies are typically in coastal areas that tend to be at greater flood risk and could cost $1,000 or more per year. However, “the cost of flood insurance is very reasonable in most areas of the country,” Friedlander says. “For $50 to $75 a month, American homeowners can have peace of mind with financial protection for flood losses.” When shopping for flood insurance, gather multiple quotes from NFIP and private insurers to compare, he advises.
What Does Flood Insurance Cover?
Policies can differ, particularly with private insurance. NFIP policies generally cover structural damage up to $250,000 and personal belongings, such as additional living expenses and outdoor structures such as fences, patios, and swimming pools. There is only partial coverage for basements. Private insurance policies may offer coverage for these items.
Weighing Your Options: Private Flood Insurance vs. NFIP
When you're deciding whether to go with private flood insurance vs. NFIP, compare these factors:
Weighing Flood Risk Against Flood Insurance Costs
Flooding isn't exactly common in Southwest Montana. But in 2022, melting snow and heavy rainfall led to unprecedented flooding. Roads washed away, and flooding severely damaged homes. “We’re not in the coastal areas like Texas, Louisiana, and Florida. But as FEMA says, ‘where it rains, it can flood,’” Leininger says. That’s why he encourages home buyers and homeowners to always assess their risk. For example, they might talk to an insurance agent or plug in addresses at FloodSmart.gov.
Homeowners may have a knowledge gap. Talking to an insurance agent about flood insurance can fill that gap and bring peace of mind.