Understanding Flood Insurance: What Every Homeowner Should Know

Due to recent events in South Texas, we feel it's important to educate homeowners about the specifics of flood insurance. Flooding is the most common and costly natural disaster in the United States—yet it is often misunderstood, especially when it comes to insurance coverage. Many homeowners assume their standard homeowners insurance policy will cover flood damage, only to find out that it does not. Knowing how flood insurance works, what it covers, and why it matters can be crucial in protecting your home and finances.

Flood insurance is a separate policy designed specifically to cover damage caused by flooding. It is typically offered through the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA), or through private insurers. Flood insurance covers physical loss caused by floodwaters, including structural damage to your home, electrical and plumbing systems, heating and cooling equipment, and certain personal belongings if contents coverage is included. However, it does not cover damage to landscaping, vehicles, or temporary housing costs. 

You might wonder if you really need flood insurance. If your property is located in a high-risk flood area, your mortgage lender will usually require you to carry flood insurance. But flooding can happen anywhere, even outside of designated flood zones. In fact, FEMA reports that over 40% of flood insurance claims come from properties outside high-risk areas. It’s important to assess your flood risk, which you can do by checking FEMA’s Flood Map Service Center or consulting your local floodplain administrator.

The cost of flood insurance depends on various factors such as your flood zone, the elevation of your building, construction type, and coverage amounts. Generally, policies in low-risk areas cost between $300 and $600 annually, while premiums in high-risk areas can exceed $1,000 to $3,000 per year. FEMA’s new Risk Rating 2.0 system now prices policies based on the specific risk to each property, meaning that two homes in the same neighborhood could have different rates.

If you experience flooding, it’s important to report the damage to your insurance company as soon as possible. Documenting damage through photos and receipts will help support your claim. Working with a licensed public adjuster can also ensure you receive a fair settlement. While FEMA and the Small Business Administration offer assistance after federally declared disasters, this aid often comes as loans or limited grants and should not replace proper flood insurance.

In summary, homeowners insurance does not cover flood damage. Flood insurance must be purchased separately and is reccomended, no matter where you live. The financial consequences of flooding without insurance can be devastating, making the relatively small annual premium well worth it. Protect your home, your belongings, and your peace of mind by understanding and investing in flood insurance before disaster strikes.

For more information on flood insurance, filing a claim for a flood coverage loss, or further assistance visit this Texas Department of Insurance webpage.