You may not think your home has a high risk of flooding, but 40% of National Flood Insurance Program (NFIP) claims come from outside high-risk flood zones, according to FEMA. And 99% of counties in the U.S. have experienced a flood.
Most residential flood insurance policies are sold through the NFIP. The NFIP was created by Congress in 1968 and is managed by FEMA. Nearly 23,000 communities participate in the NFIP and there are more than 4.7 million policies in force nationwide.
How Do I Know If I Need Flood Insurance?
If you have a federally backed mortgage and live in an area identified as a Special Flood Hazard Area (SFHA) within a participating NFIP community, you are required to have flood insurance, according to the Flood Disaster Protection Act of 1973.
Additionally, if you live in a high-risk flood area and have received federal disaster assistance, such as grants from FEMA or funds from the Disaster Loan Plan of the U.S. Small Business Administration, you are required to maintain flood insurance in order to be considered for any future federal disaster aid.
But even if you live outside of an SFHA, your mortgage lender might still require flood insurance. A standard homeowners insurance policy doesn’t cover flood insurance.
What Does the National Flood Insurance Program Cover?
FEMA flood insurance offers two types of coverage: building and contents (meaning your personal property). You can purchase a building-only coverage, a contents-only coverage or both.
NFIP flood insurance can be further broken down into two areas:
- Elevated floors.
- Areas below the lowest elevated floors, like basements, crawlspaces, “walkout basements” and enclosed areas on a ground level under an elevated building.
Coverage for Elevated Floors
NFIP flood insurance policies cover the building property (up to $250,000) including:
- Central air conditioning
- Detached garages
- Electrical systems
- Foundation walls, anchorage systems and staircases
- Fuel tanks, well water tanks and pumps
- Furnaces and water heaters
- Permanently installed bookcases, cabinets and paneling
- Permanently installed carpeting
- Plumbing systems
- Refrigerator, cooking stoves and built-in appliances (like a dishwasher)
- Solar energy e quipment
- Window blinds
NFIP flood insurance policies cover contents (up to $100,000) including:
- Personal belongings, like your clothes, computer and furniture
- Carpets not covered by building coverage (like a carpet installed over wood floors)
- Curtains
- Microwave oven
- Portable and window air conditioners
- Valuable items, like artwork and furs (up to $2,500)
- Washer and dryer
Coverage in Areas Below the Lowest Elevated Floor
FEMA flood insurance has limited coverage for building and contents in areas below the lowest elevated floors, such as a crawlspace or basement.
Building coverage for basements includes items such as:
- Central air conditioners
- Cisterns and the water in them
- Drywall for walls and ceilings
- Electrical outlets, switches and circuit breaker boxes
- Foundation walls, anchorage systems and staircases attached to the building
- Fuel tanks and the fuel in them
- Furnaces, hot water heaters, heat pumps and sump pumps
- Nonflammable insulation
- Solar energy equipment
- Well water tanks and pumps
Content coverage for basements includes items such as:
- Food freezers and the food in them (but not refrigerators)
- Portable and window air conditioners
- Washers and dryers
The following items are not insured under building or contents coverage if they are in an area below the lowest elevated floor:
- Bookcases, paneling and window treatments (like curtains and blinds)
- Carpeting, area carpets and other floor covers, such as tile
- Drywall for walls and ceilings
- Walls and ceilings not made of drywall
- Most personal property, including clothing, electronic equipment, kitchen supplies and furniture
What’s Not Covered by a NFIP Flood Insurance Policy?
The National Flood Insurance Program covers damage caused directly by a flood, defined by the NFIP as “an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.”
Water damage from problems like a sewer backup will not be covered unless the backup is directly caused by a flood.
Here are items not covered by FEMA flood insurance:
- Cars and most self-propelled vehicles (including their parts)
- Currency, precious metals, stock certificates and other valuable papers
- Financial losses caused by business interruption
- Personal property kept in basements
- Property outside of the insured building, like landscaping, wells, septic systems, decks and patios, fences, seawalls, hot tubs and swimming pools
- Temporary housing and additional living expenses if you cannot live in your home because of flood damage
How Do I Get FEMA Flood Insurance?
You can purchase a FEMA policy if you are a homeowner or renter and your property is located in a community that participates in the National Flood Insurance Program. You can contact your insurance agent and ask if your community participates or look it up in the National Flood Insurance Program Community Status Book.
You cannot purchase a flood insurance policy directly from the NFIP. You will need to purchase it through an insurance agent or company that participates in the NFIP. Call your home insurance agent to see if they can provide a flood insurance quote.
If you are not eligible to purchase a flood insurance policy from the NFIP, you can potentially buy flood insurance from a private insurance company. Here are some flood insurance options.
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FEMA Risk Rating 2.0
FEMA previously used “flood zones” to determine flood insurance costs, which relied heavily on flood insurance rate maps. Under this methodology, individual flood risk and underlying house values weren’t considered in pricing policies. This system led to massive debt for the NFIP.
FEMA launched “Risk Rating 2.0” in October 2021 as a new methodology for setting its rates. This was meant to address the program’s debt and insufficient flood insurance rates, citing access to data, new technology and an evolution in understanding flood risk. Risk Rating 2.0 was effective for all policies purchased or renewed on or after April 1, 2022.
FEMA says the key benefits of Risk Rating 2.0 include an individualized picture of your property’s risk and more types of flood risks will be reflected in the rates. Instead of using flood zones to determine costs, Risk Rating 2.0 calculates flood insurance rates on factors like:
- Replacement cost of the house.
- Specific features of an individual property, such as the foundation type and height of the lowest floor relative to the base flood elevation.
- Geographic variables, such as your home’s distance to water, the size and type of the nearest body of water and your home’s elevation relative to the flooding source.
Multiple sources are used to develop Risk Rating 2.0 rates, including:
- NFIP policy and claims data
- Existing FEMA flood mapping data
- Sea, Lake and Overhead Surges from Hurricanes (SLOSH) data
- National Oceanic and Atmospheric Administration data
- U.S. Army Corps of Engineer data sets
- Third-party sources such as catastrophic flood models, and commercially available structural and replacement cost data
How Much Does FEMA Flood Insurance Cost?
An NFIP flood insurance policy costs an average of $859 a year, according to a Forbes Advisor’s analysis of flood insurance cost.
Your flood insurance cost depends on factors like:
- The structure of your home
- Your home’s foundation type
- Elevation
- The replacement cost of your home
- Distance to water
- Frequency of a variety of flood types
FEMA offers discounts to homeowners who take steps to reduce their property’s flood risk, including:
Mitigation Discounts
- Machinery and equipment (M&E) above first floor: If certain M&E is elevated, you may be eligible for a discount. M&E includes central air conditioner (including exterior compressor), furnace, heat pump (including exterior compressor), hot water heater, elevator machinery and equipment, clothes washers and dryers, and food freezers.
- Flood openings: You could qualify for a discount if your home has flood vents in enclosures or crawlspaces. There must be a minimum of two openings positioned on at least two open walls.
Get an Elevation Certificate
If your home has an elevation certificate (EC), you may qualify for a discount. You can request to have an EC added to your policy. If the EC shows that your first floor height is higher than the first floor height determined by FEMA, you may qualify for a lower premium.
Choose a Higher Deductible
The deductible is the amount of money you’ll have to pay for repairs before insurance will start paying. FEMA flood insurance policies have separate deductibles for both building and contents coverage. If you have both coverage types, both deductibles will apply if your building and contents are damaged by a flood covered by your policy.
Generally, the higher the deductible, the less you’ll pay in premiums. NFIP flood insurance deductibles can range from $1,000 to $10,000 for both the building and contents. If you choose a $10,000 deductible, you could get a 40% discount. The problem can be paying that deductible amount if you have damage.
Get a Community Discount From the NFIP
If your community is enrolled in the Community Rating System (CRS), you could be eligible for a discount. CRS discounts are calculated based on your community’s efforts to reduce flood risk. Ask your insurance agent if your community participates in the CRS.
Is There a Waiting Period for NFIP Flood Insurance?
Generally, there is a 30-day waiting period from the policy’s date of purchase until it goes into effect. There are a few exceptions:
- There is a one-day waiting period if the building is newly designated in a high-risk Special Flood Hazard Area and you purchase NFIP flood insurance within the 13-month period following a map revision.
- There is no waiting period if you purchase NFIP flood insurance in relation to making, increasing, extending or renewing a mortgage loan.
- There is no waiting period if you select additional insurance as an option on your NFIP flood insurance policy renewal bill.
- The waiting period may be waived if a property is affected by flooding on burned federal land and the NFIP flood insurance policy is purchased within 60 days of the fire-containment date.
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National Flood Insurance Program Frequently Asked Questions (FAQs)
Is FEMA the only flood insurance option?
FEMA flood insurance isn’t the only option. You may be able to buy flood insurance through a private insurer.
Private flood insurance is sometimes available as a “base” policy, as an alternative to FEMA insurance.
You can also buy a private flood insurance policy as an “excess” policy to FEMA flood insurance. This will provide supplemental coverage on top of the FEMA base policy. For example, you might want $500,000 of building coverage, but the NFIP policy limit is $250,000. An excess flood insurance policy could provide the additional $250,000 of coverage.
What type of water damage is covered by the National Flood Insurance Program?
NFIP flood insurance covers water damage caused by a flood, defined as “an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.”
Some water damage will be covered by your homeowners insurance, like damage from a burst pipe. Other water damage won’t be covered by any insurance, such as water damage due to lack of maintenance in your house.
Does flood insurance cover mold?
Flood insurance from the National Flood Insurance Program will not cover damage from mold, except for very rare circumstances, such as when floodwaters remain in the area and prevent you from inspecting and maintaining the home, or when an authorized official bans entrance to the area.
It’s also unlikely you’ll be covered by your homeowners insurance. Generally, homeowners insurance covers mold for certain problems, like mold that appears after a burst pipe, but not flooding.
