Understanding Flood Insurance

All you need to know about flood insurance, including what it covers and who should purchase it

Flooding is the most common and costly type of natural disaster in the U.S. Just an inch of water in an average sized home can cause more than $25,000 in damage, and the average cost of flood damage is almost $40,000. Despite this, most homeowners and renters insurance doesn’t cover flooding. That’s why it’s more important than ever to understand and consider buying flood insurance.

What does flood insurance cover and how much does it cost?

How much you have to pay for flood insurance will vary based on the risk of where you live, how high your house is above ground level, and other factors. The average cost is $700 per year, but can be as little as under $150 and as high as thousands of dollars.

Renters, homeowners, and businesses in communities that participate in the Federal Emergency Management Agency’s National Flood Insurance Program (NFIP) can buy flood insurance through the NFIP program. It covers up to $250,000 for the house itself, and an additional $100,000 for items inside the house.

You can also buy additional coverage from private insurers to cover damage above these limits. Homeowners should be aware that flood insurance covers the footprint of your home and garage, but does not usually cover damage to cars, yards, swimming pools, or other property outside the house.

Is flood insurance different from federal disaster assistance?

The NFIP differs from federal disaster assistance in that homeowners are not required to pay back the cost of recovery, but instead pay a yearly premium. Most types of federal disaster assistance not only require a presidential disaster declaration, but come in the form of low-interest disaster loans that must be repaid with interest added on.

Only flood insurance reimburses you for flood damage, providing the necessary funds for recovery — and you don’t have to pay it back.

Flood insurance premiums can be reduced when the community takes action to decrease its overall risk and when individuals take steps to make their homes safer — read more on this below!

Should I get flood insurance?

Homeowners who live in high risk FEMA flood zones (also known as 100-year floodplains) are required to buy flood insurance.

If you live in a 100-year floodplain, it actually means each year you have a 1% chance of flooding, not that flooding occurs only once every 100 years. The odds of getting hit by a 100-year-flood over the course of a 30 year mortgage are 26%. A 500-year floodplain works the same way, only it covers a larger area. The odds of getting flooded during a 30-year mortgage are 6%, which is also much higher than most people think.

Flood insurance is recommended for those living in low and moderate risk areas. According to the Federal Emergency Management Agency (FEMA), people outside of high-risk flood zones file more than 20 percent of all NFIP claims. Homeowners in these areas benefit from significantly cheaper premiums, which can be as low as $325 a year (less than $30 a month).

How do I determine if I’m in a risk zone and need flood insurance?

You can find out your flood risk by checking your FEMA flood zone, or finding your property’s different flood risks through FloodiQ.com. It’s important to remember that while your risk may currently be low or minimal, it could increase over time as sea levels rise.

Find out your FEMA zone

FEMA creates maps for the United States that show the risk of flooding based on historical flood events. These maps determine how much people pay for flood insurance and help the government plan for and protect against disasters.

FEMA flood maps do not include sea level rise, and many of are out of date, with roughly 15% of all maps dating back to the 1970s or 1980s. Because of this, many homes have greater risks than their FEMA risk zone may suggest, as sea level rise worsens the risk and impact of flooding.

Find out your property risk

To find your home’s risk for flooding, go to FloodiQ.com and get a free flood risk report. You can find flood risk information broken down by risk type, and gain a better picture of your future flood risks.

Flood iQ uses up-to-date data gathered from digital elevation models, water level surfaces, tide gauge readings, hurricane simulation outputs, and ortho-imagery from the USGS, NOAA, and USDA. It combines this data with the USACE’s sea level rise curves to produce city and property flood risk projections.

How can I lower my flood insurance premiums?

Actions at the city level can impact your flood insurance premiums through the Community Rating System (CRS), which is a voluntary incentive program that recognizes and encourages proactive flood solutions that go beyond the minimum required by the NFIP.

The CRS scores communities on a scale of 1–10, based on how prepared they are for flooding (the lower the score, the more prepared the community). If you have flood insurance through the NFIP, you could receive discounts in your premiums, anywhere from 5–45%, based on the actions your community takes to reduce the risk of flooding.

If you pay $700 per year now for flood insurance, this could mean savings of up to $315 per year. If you pay more than that, your savings could be even greater. Norfolk, Virginia recently improved from a class 9 to a class 8 ranking, saving almost 7,000 residents 10% on premiums, or an average of $107 per year.

The best way to reduce the cost of your flood insurance premium is to contact your local city or town official and ask what they’re doing to improve your city’s CRS rating and to reduce your risk of flooding. Not sure who to contact? Check your city or address on Flood iQ, and it will provide the best contact (and contact information) for you to reach out to.

Though flood insurance can be a daunting topic, we hope that this has simplified it and offered some valuable tools for understanding it and taking proactive steps to protect your home.

As always, we love feedback and are always trying to improve.Comment below or email us at info@firststreet.org.

First Street Foundation is a registered 501(c)(3) public charity that works to quantify and communicate the impacts of sea level rise and flooding