Flooding is the most frequent and expensive disaster that occurs in the United States. Due to rising sea levels and extreme weather, the cost of flood damage across the country is expected to rise in the coming decades. Last year, it was estimated that $20 billion worth of damage was caused as a result of flood damage, which could rise to $32 billion by 2051.

Flood insurance, therefore, is highly recommended. Depending on the area in which you live, it may be a requirement to acquire flood insurance (such as in a high-risk flood area). If you are wondering “Do I need flood insurance?” this blog post is for you. Here, we will highlight everything you need to know about getting a flood insurance policy.

Do I Need Flood Insurance?

Many property owners around the country need to obtain flood insurance. This is the case if their property is located in a high-risk flood area and the owner has a mortgage from a federally regulated or insured lender.

Though this is not typically the case if a property is located within a moderate-to-low-risk area, a lender may still require an owner to hold flood insurance at any time. This is true, even if they are not legally mandated to do so.

Per the National Flood Insurance Program, properties in Zones A and V are considered high-risk, while properties in Zones B, C, X, and D are considered moderate-to-low-risk.

What Does Flood Insurance Cover?

Homeowners can purchase either personal contents coverage, building property coverage, or both. Building property coverage helps to protect the physical structure of a home, its foundation, and the following:

  • Central air and heating systems
  • Repair of electronics and plumbing systems
  • Detached garage
  • Cabinets and paneling
  • Attached bookcases

The maximum coverage limit here is $250,000. Payouts are based on replacement cost (i.e. what it would take to repair the property in today’s dollars) for a primary residence. For a vacation property, it is based on actual cash value with depreciation factored in.

For personal contents coverage, this helps to protect the following:

  • Electronics
  • Furniture
  • Clothing
  • Some portable appliances
  • Curtains
  • Certain valuables (such as art)
  • Freezers (and their food contents)

The maximum coverage here is $100,000. Payouts are based on actual cash value with depreciation taken into account. Click here to learn more about the cost of flood insurance in Colorado.

Understanding Flood Insurance in the United States

The bottom line is that you may need to have flood insurance in certain situations. In any case, it is always beneficial to have flood insurance so that you, your family, and your property are protected against the risk of flood damage. Note that standard property insurance policies (i.e. homeowners insurance) do not typically cover flood damage.

Like this blog post on “Do I need flood insurance?” Be sure to check out our other informative articles on a wide range of interesting topics.

By Manali