What Is Flood Insurance?

Flood insurance is a separate policy that covers water damage from flooding — something your standard homeowners policy does not include. If your property is in a FEMA Special Flood Hazard Area (zones starting with A or V), your lender will require it.

NFIP policies through FEMA offer up to $250,000 in dwelling coverage and $100,000 for contents. Under FEMA’s Risk Rating 2.0 pricing, the average NFIP policy costs about $700–$1,500 per year, though high-risk properties can exceed $3,000. Private flood insurers may offer higher coverage limits and competitive pricing. Like homeowners insurance, flood premiums are typically collected through your monthly escrow payment.

Key Facts

• When required: Lender-mandated for any property in a FEMA Special Flood Hazard Area (A or V zones)
• NFIP coverage limits: $250,000 dwelling / $100,000 contents
• Average annual cost: $700–$1,500 under Risk Rating 2.0; high-risk areas may pay $3,000+
• Waiting period: NFIP policies have a 30-day waiting period before coverage takes effect (waived at closing)
• Private alternatives: May offer higher limits, replacement cost coverage, and no waiting period

Frequently Asked Questions

Do I need flood insurance if I’m not in a flood zone?

Your lender will not require it, but FEMA reports that over 40% of flood claims come from outside high-risk zones. A Preferred Risk Policy from the NFIP can cost as little as $400–$600 per year and provides peace of mind if you are near any body of water.

How do I find out if my property is in a flood zone?

Check FEMA’s Flood Map Service Center at msc.fema.gov by entering the property address. Your lender also orders a flood determination certificate during underwriting to verify the property’s zone classification.