How Much Flood Insurance Do I Need?

When considering purchasing flood insurance, it’s important to consider your property’s value, rebuilding cost of it and the level of flood risk area your property is in.

As a homeowner, when you’re deciding just how much insurance do you need, you need to consider several things such as, the property inside, replacement cost of the property, and your total assets in order to set the coverage limits.

Moreover, you also need to further optimise your insurance coverage to cover your property from any kind of hazardous risks that are likely to happen in the area you’re residing in.

Flood insurance works similarly to all the other insurance you purchase for your property. The only difference is that instead of getting insurance coverage for a number of components in your house, you simply focus on two – coverage for your property’s structure and coverage for all your personal property inside the house.

Why Do You Need Flood Insurance

Intense thunderstorms and flash floosings are becoming much more common in the United States. This is exactly why you should as a homeowner go over your homeowners insurance policy to see just how much of a flood coverage you are eligible for.

Even though flood damage will eventually be fixed once the homeowner insurance takes place, many of these owners are dumbfounded when they are told that damage caused by floods is most likely not covered in their policies.

It is important to know that most of the homeowners policies out there barely cover any damage caused by the floodings or damage caused by any groundwater, unless of course the intrusion scenario is covered.

Homeowners not only spend their lives paying for the house mortgage but also spend thousands of dollars on home renovation. But, one flood can easily cause so much financial damage that there is no point regretting that you didn’t purchase flood insurance when all of this happens.

So why not purchase a separate flood insurance when you’re already spending so much on the homeowners insurance?

How Much Flood Coverage Do I Need?

In order to determine how much flood insurance coverage do you require, you’ll need to work alongside an insurance professional, who can guide and advise you as per your requirements and the risk level your property is in.

What Does Flood Insurance Cover?

It’s important to know that flood insurance provides coverage in two forms – replacement cost value or actual cash value. The replacement cost value covers the cost to repair or replace flood damaged property items that are already insured.

No such deduction is calculated for the damaged property items wear and tear. Whereas for the actual cash value coverage, it covers the similar costs as the replacement cost value coverage, but includes the wear and tear cost based on the property item’s condition and age.

What an insurance professional can help you do is, calculate either the replacement cost or the actual cost value or your property and its items, and further initiate a flood policy quote for all the damage caused by the flood.

The National Flood Insurance Program (NFIP) provides maximum of the flood insurance coverage that is available in several communities in the United States. Flood coverage limits differ from one another, but maximum coverage is usually $250k for a residential property and $100k for its personal property and content in the house.

Of course, you can always choose to go for a lower flood coverage as long as it meets your requirement. However, do be mindful that if your property has a high value, even the $250k coverage might not be enough.

You can further choose to cover the coverage gap by purchasing a secondary flood insurance from a private company. Even though such private flood insurance companies might not be as accessible as NFIP, and they are likely to have higher premiums and deductibles.

If NFIP for some reason isn’t readily available in the area you’re residing in, you might be able to purchase a policy from a private insurance company. When you’re considering just how much insurance you require, always take the cost of repairs, personal items and items such as clothings, furniture and electronics into consideration as well.

Flood Insurance Risk Levels

In America, almost every house with either floors or below the Base Flood Elevation (BFE) ought to have flood insurance coverage. Most if not all counties in the U.S. Basically the BFE is the level of risk area your property is in, when there’s a flood.

If the BFE isn’t available in the area in which you’re residing in, the Federal Emergency Management Agency (FEMA) is likely to suggest that you should consult a floodplain administrator in your community for further assistance and information.

Moreover, FEMA’s flood map service provides you with thorough information about the flood zone you’re in. There are a number of risk areas, but we’ve simplified them into three major categories.

High-Risk Flood Zone

A high-risk area has a minimum of one percent chance of a flood occuring every year. As a homeowner in this area who has a federally regulated or insured mortgage must purchase flood insurance.

If you’re one of the few homeowners who have an unregulated mortgage that doesn’t require you to have flood insurance, we suggest you should still get your property covered. According to FEMA, houses located in high-risk areas have a high chance of flooding over a 30-year mortgage term.

Moderate to Low-Risk Flood Zone

Moderate to low-risk flood zone areas have less than one percent chance of a flood occuring every year. However, the possibility of a flood hasn’t been totally eliminated. Federally regulated lenders aren’t required to have flood insurance coverage, but despite that, it’s still very much recommended for homeowners in these areas to purchase one.

Undetermined-Risk Flood Zone

Now, these are the areas that have yet to be mapped out by FEMA. This creates a certain level of uncertainty around the house’s risk for both the insurance companies and residents. If you’re residing in an undermined risk area, you should consider consulting the local floodplain administered in your area.

They will be able to provide you with further information about how much of a flood risk your area is in. Or, you can also speak to homeowners in your community itself to understand how flood protection is common in your region.

Buying Flood Insurance

Buying flood insurance for your property is where things may seem a little confusing even after all the research you did. Speaking with your insurance agent will make things much more simpler and clearer to you.

Your insurance agent will be able to figure out just how much flood coverage you should buy and its costs. Moreover, you’ll be able to understand what the flood insurance coverage you’re deciding to go ahead with covers and how long will the waiting period be.

Generally, you are required to pay for your choice of flood insurance policy a month before you flood coverage is up and running. You simply can’t pick a flood insurance policy at the first forecast of a huge storm.

However, if your current insurance agent doesn’t provide flood insurance, you are always able to purchase one from a separate flood insurance policy without having to switch your insurance agent.

Here are some questions we feel you should consider asking your agent before buying a flood insurance policy:

  • Does this insurance policy cover all replacement costs? Be mindful that most flood insurance policies rarely cover full replacement costs, and further include a cap on your property’s structure and its contents.
    That being the case, you should consider opting for the “guaranteed replacement cost” in your policy. Do know that there will be extra charges to it.
    However, if you’d rather not opt for this option, you’ll probably only receive a few hundred dollar bills for your run down electronics and other items that will eventually cost you a huge amount to replace.
  • Do I have sufficient flood coverage? It’s common for policyholders to leave their insurance policies aside and only refer to them when needed. However, you should check your insurance policy in case you might be underinsured.
    Make sure you document each and every improvements made to your property alongside any big purchases made. Keep all of this information at a safe place where it won’t be at risk when there’s a flood or fire.
    Hence, if your flood coverage isn’t too strong, you can show the above kept information to your insurance agent and discuss if your policy limits can be raised in accordance to the improvements made to your property.
  • What about my deductible amount? You should definitely discuss with your insurance agents both the pros and cons of either increasing or decreased the deductible amount.
    If by adding flood insurance coverage to your policy pushes the entire policy price to a certain point where you find it hard to afford, perhaps raising the deductible amount may just benign the price back down.

Private Flood Insurance

Over time, it’s become more and more common for insurance companies to both write and further service their personally financed flood insurance, Private flood insurance is an alternative to NFIP coverage.

Private flood insurance coverage is generally higher as compared to that of NFIP coverage, you’re able to receive the replacement costs content’s entire coverage, and research has shown that coverage in high-risk areas by private insurance companies is surprisingly cheaper.

Flood Insurance Requirements

NFIA and the Flood Disaster Protection Act (FDPA) created flood insurance requirements of lenders due to the danger flood can cause to properties. Moreover, mortgage companies require homeowners to have flood insurance because they themselves have a financial steak in the property.

If a house is completely destroyed by a terrible flood, and the owner decides to abandon the property and further stops making the due payments, the mortgage lender will eventually find himself stuck with a property with no value.

Which is why, having flood insurance mitigates any financial risk that both the homeowner and mortgage holder could have in the future. Hence, flood insurance has become a requirement today.

Can I Avoid Flood Insurance Requirement?

We’re sure many of you have wondered if it’s possible to skip the flood insurance requirement. Let us enlighten you. Well, for starters, it’s only mandatory for you to have flood insurance coverage if your property is in a high-risk area and if your mortgage lender requires you to have it.

If you have no mortgage on your home and it’s located in an undetermined-risk area, you’re not obligated to have flood insurance – but it’s still highly recommended for you to purchase flood insurance, just in case.


Flooding has become more common than what we know. The damage floods can do to properties is beyond one’s imagination. In fact, it’s perhaps the most expensive form of damage in America – with the maximum of all natural disasters consisting of flooding.

As explained above, some areas are more prone to flooding as compared to others. This form of policy is a life saver, and we’re sure this is one kind of damage you wouldn’t want to experience in your entire lifetime!

Charles Bains

Charles Bains

Charles Bains started his insurance career as a marketing intern before pounding the pavement as a commercial lines agent in Orlando, FL. As an industry journalist, his articles have appeared in a variety of trade publications. His insurance television career, short-lived but glorious, once saw him serve as the expert adviser on an insurance-themed infomercial (yes, you read that correctly). Having recently worked for various organizations, coupled with his broader insurance knowledge, Charles is able to understand our client’s needs and guide them accordingly. He is a gem for Insurance Noon as his wide area of expertise and experience have been beneficial in conducting further researches to come up with solutions and writing them in a manner which is easy for everyone including beginners to comprehend.

Leave a Reply