What is flood insurance?
Flood insurance is a separate stand-alone policy that protects your home and personal belongings from loss due to flooding by external floodwaters, such as high tides, overflowing lakes and rivers, flash flooding and even groundwater flooding. Flood insurance is especially important if you live in a high risk flood zone. Even if you have homeowners insurance, you'll want to look into your risk of flooding because most homeowners insurance policies do not cover flooding originating from outside the home.
Who needs flood insurance?
Technically, anywhere it rains it can flood. About 1/3 of all flood-related insurance claims are made by people in low- to moderate- risk flood zones. Most people think a flood zone is an area with very low elevation, or a coastal property. While those places are certainly at a higher risk of flooding, your home can still flood for a variety of reasons even if you're in a low risk zone.
Common sources of flooding include areas where new construction has changed the natural runoff paths for excess water, and flash flooding caused by hurricanes and other weather events. Flooding can also come from extreme weather that causes inland flooding from streams, ponds, rivers and lakes.
As insurers we are usually inclined to recommend flood insurance for people who aren't in high risk flood zones because of the above examples. That said, you'll want to consider what's at stake and what you can afford. You can always request a quote for flood insurance for free from your insurance agent, which may help you make the decision that best suits your situation.
How do I know if I'm in a flood zone?
If you're in the process of purchasing a home, you'll want to find out if it's located in a flood zone. Because real estate disclosures vary state by state, your state may not require the home seller to disclose that the home has flooded before. (As an aside, this is a great example of why using an independent insurance agent is the way to go when setting up an insurance policy. We will look at all factors surrounding your home, including your flood risk, to help make sure you don't have any vulnerable spots in your policy.)
If you already own a home and are curious about your flood risk, your local government may provide a free online tool to help. If you're located in Virginia, you can find your flood zone by locating your address in the Virginia Flood Risk Information System. You can also call your insurance agent to discuss your options if you're concerned about your home flooding. Insurance agents use these tools every day to help their clients assess their risk.
Is flood insurance required?
Whether or not you're required to have flood insurance depends on your mortgage, the property location, and some other factors. If you are obtaining a mortgage from a federally regulated lender, you will be legally required to have flood insurance if your home falls in a high risk flood zone.
How much does flood insurance cost in Virginia?
Regardless of where you live, most people who have flood insurance pay an average yearly premium of about $700. (This average includes premiums of people who are in high risk flood zones. If you're in a low- to moderate-risk flood zone, it will most likely be lower than that.)
Let's say your premium ends up at the average: $700 per year. If you pay per month, that's about $58/month. We would argue it's quite affordable, and here's why: If your home does flood and you end up with $100k in damages, you'd be paying that out of pocket if you didn't have the insurance. If you decided to pay $700/year for the flood insurance, after 50 years you've spent $35k, but that $100k in damages would still be covered.
Why do I need flood insurance if I have homeowners insurance?
An easy way to look at it is this: Homeowners insurance usually covers water leaks and other flooding that originate from inside the house. Flood insurance covers flooding that originates from outside of your home. There are some exceptions, which is why it's important to talk to your insurance agent so you know what's covered and what isn't. Most homeowners insurance policies will also cover water damage from wind-driven rain damage, whereas flood insurance would most likely not cover that.
What isn't included in flood insurance?
As with any insurance policy, you'll find exceptions to what's covered by your flood insurance. That's because the line has to be drawn somewhere between what your homeowner's insurance, flood insurance, auto insurance, jewelry insurance, etc. cover. Sometimes these coverage exceptions can seem really specific, but there's a reason for that. Here are some items that aren't typically included in flood insurance:
- Flood insurance usually covers personal items, but high value and heirloom jewelry, furs, and other expensive items may not be covered, simply because your flood insurance will probably have coverage limits that these items exceed. If you have valuable items in your home, you'll want to ask your agent about extending some coverages to include those items.
- Your vehicles will also not be included in your flood insurance. (What's what your auto insurance is for).
- Flood insurance has two main coverage categories: structural and personal property. However, if you have a home with a basement, the personal items in that basement may not be covered if it's flooded. That's because basements simply post a higher risk of flooding. The structural aspects of the basement, however will likely still be covered. This would include foundation, drywall, electrical, air conditioners, staircases, and insulation.
- Flood insurance also usually does not cover damage caused by earthquakes, even if the earthquake was caused by flood waters. If you live near a fault like, please do yourself a favor and ask your agent about earthquake insurance. Earthquakes are another type of risk that are usually not covered by a standard homeowners policy.
- Finally, flood insurance usually doesn't cover subsequent needs that occur after a flood, such as costs for temporary housing if you have to move out for repairs, or loss of wages due to business interruption.
If you have concerns about any items on your property that you'd like to be covered by your flood insurance, be sure to mention it to your insurance agent.
Is flood insurance an add-on policy to my homeowners insurance?
Flood insurance is a stand-alone policy separate from your homeowners insurance. Most flood insurance is purchased from the National Flood Insurance Program (NFIP), which is part of FEMA, an agency of the United States Department of Homeland Security. The insurance policy can be purchased by your local insurance agent, but will be underwritten by the federal government. There are also private companies that provide flood insurance, but their coverages and claim guidelines may vary.
Can I opt-out of flood insurance?
Unless you live in a high risk flood zone, you won't be required to purchase flood insurance. However, if you do live in a high risk zone and your mortgage is from a federally regulated lender, you'll most likely be told it's required in order to purchase the home. If you disagree with this, you can try to opt out of the requirement by having your home rezoned out of the flood plain. This is done by having a surveyor assess your elevation and submitting the documentation to FEMA as a map amendment. We don't recommend doing this, however, unless you are positive that your home has been deemed high risk by mistake.
How long does it take for a flood policy to take effect?
If there's an immediate threat of bad weather in your area and you're worried about flooding, it's probably too late to get a flood insurance policy in place before the weather hits. Usually there's a waiting period of 14-30 days when you purchase flood insurance. With that said, if you're thinking about getting flood insurance, there is never a better time than now. It's something you'll probably thank yourself for later.
How do I get flood insurance?
It's as simple as contacting your insurance agent and asking for a quote. It will be easier if you use the insurance agent you obtained your homeowners insurance through, since they'll already have your household information on file. Your agent will be able to answer any detailed questions about your property, coverages, and make sure you have no vulnerabilities.
Flooding is consistently the #1 natural disaster in the United States. In 2019 flood damage reached $3.75 billion in the United States. If you only take one thing away from this article let it be this: Your homeowners insurance doesn't cover external flooding. If your home becomes flooded, you'll be left to foot the bill for any damage that was done. And considering that even 1 inch of flood damage costs on average of $25k, it might be a huge bill. We always recommend considering flood insurance when you're purchasing homeowners insurance.