You Need Flood Insurance

Homes under water after Hurricane Harvey.

We talk a lot about flood insurance at I.I.I. for at least two good reasons:

  • It’s the most common and costly natural disaster in the United States, with billions of economic losses every year. According to the National Flood Insurance Program (NFIP), 90 percent of natural disasters in the U.S. involve flooding.
  • A 2016 I.I.I. survey found that 43 percent of US homeowners incorrectly think that heavy rain flooding is covered under their homeowners insurance – and only 12 percent had flood insurance.

Floods happen. Regularly. Even if you’re not in a flood zone – and even if you’re not usually in the path of a hurricane. If your home gets flooded, it will be a financial and emotional nightmare: FEMA argues that only 1 inch of water can cause $25,000 of damage to your home.

Your homeowners insurance won’t cover floods: If you don’t have flood insurance for your home, you probably aren’t covered under your homeowners or renters policies because flood risks used to be considered uninsurable.

To address this lack of coverage, the National Flood Insurance Program (NFIP) was created back in the 1960s. The NFIP is a federal program that provides flood insurance to participating communities. If your community participates in the program, you can often purchase insurance through a private insurer that handles policies and claims on behalf of the NFIP.

Private insurers have also recently begun offering flood insurance outside of the NFIP, as new modeling techniques have helped them get a better handle on the risks and costs.

Flood insurance will usually cover physical losses to your home caused by floods or flood-related events, like erosion – with some limitations (trees and fences aren’t covered, for example). You can also buy coverage for the contents inside your home, making flood insurance a crucial tool to help you get back on your feet.

Because disaster assistance won’t be enough: disaster assistance is often only available if you live in a declared disaster area. And even if you are, the FEMA disaster grant is only about $5,000 per household, a fraction of the average flood insurance claim of $30,000.

Flood insurance pays whether you’re in a declared disaster zone or not.

To learn more about how flood insurance works, see our resources here at I.I.I.:

One thought on “You Need Flood Insurance”

  1. Thanks for pointing out that you shouldn’t rely on disaster assistance because they only pay in declared disaster areas. My husband and I just moved to a new home, and we’ve been deciding if we should get flood insurance of not. I wasn’t aware that disaster assistance is carefully zoned and only pays about a sixth of the average flood claim. I appreciate you sharing these reasons to get flood insurance!

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