What Is Flood Insurance?

Written by Steven PorrelloSeptember 28th, 20224 minute read

Flood insurance definition | Is flood insurance mandatory? | U.S. flood zones | Costs | Coverage

Flood insurance covers the structure of your house and your belongings when they’re damaged by an "external flood," such as those caused by torrential rains, storm surges, or overflowing from backed-up storm drains. It’s not automatically included in your home or condo insurance and must be purchased separately.

One inch of floodwater could cause around $25,000 of damages to your home.[1]

So although you may not be legally required to have a policy, flood insurance could be a smart investment.

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What is flood insurance?

Flood insurance covers two things from external flooding:

  • Property coverage, the structure and systems in your home
  • Content coverage, your belongings

Lenders typically only ask you to buy property coverage, as water damage in a home’s structure can significantly lower its appraised value. They usually won’t require you to buy content coverage. Learn more about what's covered.

Flood insurance vs. homeowners insurance

Flood insurance covers damage to your home from external water (such as from torrential rain), while homeowners insurance covers damage from internal systems failures (such as leaky pipes).

Flood insurance vs. hurricane insurance

Flood insurance covers damage from water, while hurricane insurance covers damage from wind. If you live in a storm- or hurricane-prone area, you may want to buy policies for both.

Is flood insurance mandatory for a mortgage?

If you’re in a high-risk flood zone, your lender will almost always require flood insurance. These high-risk areas are determined by the Federal Emergency Management Agency (FEMA), and they’re designated with an “A” or a “V” on FEMA’s flood maps.

Government-backed mortgages (such as an FHA, VA, or USDA loan) legally require you to have flood insurance in high-risk areas. Conventional lenders will often require you take out a property coverage policy as well, especially if the area has had recent flooding.

Should I get flood insurance if it's not required?

Even areas FEMA-diagnosed as low to moderate risk can still flood unexpectedly. Consider getting flood insurance if the potential damages to your home would be too costly to cover on your own.

Am I in a high-risk flood zone?

You can check flood zones by searching your zip code on FEMA’s flood map.

Flood zones can change

FEMA updates its flood zones frequently, and it’s not uncommon for areas to fluctuate between moderate and high risk.

Tips for using the FEMA Map Service Center

Note: The tool lags frequently, so give the map a few seconds to load with each step.

After you search your postal code, the tool will find it on its map with a blue outline:

The map boundary is super sensitive to zooms and will likely end up in an area outside of yours. Instead, slowly double-click the area INSIDE the blue outline. It may take two or three clicks to get close enough.

Once you are zoomed in on the red pin, the map will gradually start to populate.

If your outlined space is shaded with blue or is labeled "AE" or "VE," then your property is in a Special Flood Hazard Area and you’ll need flood insurance.

If there’s no blue shading, then you’re not in a flood hazard area and flood insurance is likely optional.

How much does flood insurance cost?

According to FEMA, flood insurance costs an average of $700 per year.[2]That said, the cost of an annual premium will ultimately vary by your flood zone and property features (e.g., age, type, number of bedrooms).

What factors determine how much I pay for flood insurance?

Where can I buy flood insurance?

You can buy flood insurance from two sources:

National Flood Insurance Program (NFIP): federally backed flood insurance offered through FEMA. If you’re getting a government mortgage (e.g., FHA, VA, or USDA loan), you’ll likely buy flood insurance through NFIP. The maximum on property coverage is $250,000. So if your home is appraised for higher than that, you might want to buy extra coverage from a private insurer.

Private insurance company: non-government insurers who offer flood insurance, usually as a supplement to your homeowners policy. The premiums may be cheaper than NFIP, and you can buy up to $500,000 in property coverage.

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Does flood insurance count toward my DTI?

Yes, if your lender requires flood insurance, it will count toward your housing payment in your debt-to-income ratio. Depending on your location, flood insurance could add another $50 to $100 to your DTI.

Do I have to pay flood insurance in my closing costs?

If your lender requires flood insurance, then you’ll likely pay a portion of your premium up front with other closing costs. Your lender will then put this money in an escrow account and pay for your premium with these funds after closing.

What does flood insurance cover?

Flood insurance is broken into two separate policies: property coverage and contents coverage. Here are some of the things they do and don't cover.

✅ Covered
❌ Not covered
Home structure
Major systems
Outdoor items
Built-in features
Currency and legal tender
Detached structures
Underground belongings
Damage from flood-related issues, e.g.:
  • Internal flooding
  • System failures
  • Moisture, mildew, or mold
  • Mudslides

Property coverage insures your home's structure and major systems

NFIP will insure up to $250,000 in damage, while private insurance can cover up to $500,000.

  • Electrical, plumbing, HVAC, water heaters
  • Built-in appliances, such as stoves, cabinets, and paneling
  • Permanently installed features, such as drywall, insulation, staircases, window blinds, and carpeting
  • Detached structures, such as garages

What’s not included?

  • Landscaping and fences
  • Porch items, such as balconies, decks, and patios
  • Pools and hot tubs

Contents coverage insures your personal belongings up $100,000

What’s included?

  • Electronics
  • Clothing
  • Portable appliances, such as microwaves
  • Food
  • Dishwashers, washers, and dryers
  • Home decor
  • Artwork (up to $2,500)

What’s not included?

  • Currencies, stock certificates, precious metals
  • Cars and other vehicles (even if they’re parked in your garage)
  • Any belongings stored in below-ground spaces, such as in basements and crawl spaces

National Flood Services. "Estimated Flood Loss Potential." 


U.S. Department of Homeland Security. "Historical Flood Risks and Costs."