What Is Flood Insurance? Can You Get it Cheaply?

An estimated total of 41 million Americans live in or near flood zones. Those that live in these areas are legally required by the Federal Emergency Management Agency (FEMA) to have flood insurance, and it’s also recommended for those not living in high-risk zones. 

However, only an estimated 12% of Americans have coverage if their home floods. Here we’ll take a look at what this type of insurance is and why you need it, even if you don’t live in a high-risk area. We’ll also see how you can get it for cheap. 

What Is Flood Insurance?

Flood insurance protects your home and belongings inside the house from water damage caused by flooding. You’re legally required to have this form of insurance if you live in areas with a high risk of flooding. The ten states most at risk are:

  • Florida
  • Louisiana
  • California
  • New York
  • New Jersey
  • Virginia
  • South Carolina
  • North Carolina
  • Massachusetts
  • Georgia

Only certain regions of these states are at risk for flooding. If you live in the areas specified by FEMA, then you must have the correct insurance for your home. If you’re unsure whether you live in a high-risk area, FEMA’s website has a regularly updated map and other features to help. 

It should also be noted that some mortgage lenders will require you to have flood insurance. You might be required to have this insurance even if your home isn’t in a designated zone and is also not near a lake, ocean, or river. Flooding can still happen due to heavy rains, thawing in the spring, hurricanes, and many other causes.

The chances of you needing this form of coverage are quite low. In fact, it’s smaller than the chances of you using your car or health insurance. However, it can give you peace of mind to know your belongings are insured should a flood occur. 

What Qualifies as Damage from Flooding?

When you make a claim to your insurance provider, you must be able to prove the damage to your home or personal belongings came from flooding. For example, if mold or mildew has destroyed your possessions, it must be proven without a doubt that it was caused by water from a flood. 

No flood insurance policy will pay you if the damage is caused by business interruption, car damage, or other living expenses. 

Insurance agencies have specific definitions as to what constitutes a flood. For example, water damage from a sewer backup does not qualify unless the backup was caused by flooding. The same goes for a burst pipe. The damage must have been caused by flooding for your insurance to payout.

Types of Flood Insurance

There are two types of flood insurance programs. You can go through the National Flood Insurance Program (NFIP) or you can get private flood Insurance. There are pros and cons to each, meaning the choice will depend on your needs. 

National Flood Insurance Program (NFIP)

The NFIP is a federal program that works in collaboration with FEMA’s Mitigation Division. The program partners with over fifty insurance agencies and various independent brokers across the United States. 

When you buy a policy through NFIP, it means you’re purchasing a policy from the various insurance companies and agents rather than from the federal government. Your rate will depend on your home’s location, property value, and its age. 

The plans come with fixed premiums. The most you will be covered is up to $250,000 in damages. The insurance covers the foundation, electrical and plumbing, finishings, appliances, personal belongings, and more. 

Coverage for the contents inside your building will typically only be up to $100,000. This is often bought separately from the insurance that covers the building. The two also have different deductibles.

Anyone can apply through NFIP and get reliable flood insurance. You may even be able to get a lower rate if you live outside of a high-risk flood zone. It should be noted, though, that these plans do not include coverage for additional living expenses. 

Private Flood Insurance

Private flood insurance is not associated with the federal government, unlike the NFIP. The availability of coverage depends on what state you reside in as well as the location of your home. It can be cheaper than some NFIP plans, but this is not a guarantee. 

There are also shorter waiting periods than going through NFIP. You will typically only be waiting two weeks versus the NFIP’s standard thirty days. There are higher coverage totals and customizable protections to fit your needs exactly. 

The con of using private flood insurance is the risk of getting dropped unexpectedly or not getting a policy renewal. 

The advantages of private flood insurance include almost double the limits of the NFIP’s $250,000 coverage. You may also be paying less than the NFIP due to competition between local agencies. There’s a wider variety of plans to fit your needs, too. 


Having flood insurance for your home can give you peace of mind in the event of a natural disaster. There are different plans to fit your specific needs and preferences. 

The NFIP is provided by the federal government and offers fixed plans for those in need. Private flood insurance companies offer more customizable coverage and can often give you a cheaper price. Take a look at the top cheap flood insurance strategies by ISoldMyHouse.com to see what you can do to pay less.

Be sure to ask your agent specific questions to determine which plan is right for you. You can decide on the proper coverage for you based on your home’s location and what you want to be covered.