Flood Insurance
A separate insurance policy covering property damage caused by flooding, which is excluded from standard homeowners policies.
What is Flood Insurance?
Flood insurance is a distinct policy that covers structural damage and personal property losses caused by flooding — defined as an overflow of water onto normally dry land. Because standard homeowners, renters, and commercial property policies universally exclude flood damage, property owners in flood-prone areas must purchase a separate flood policy. The primary source is the National Flood Insurance Program (NFIP), a federal program administered by FEMA that covers buildings up to $250,000 and contents up to $100,000. A growing private flood insurance market offers higher limits, broader coverage, and sometimes lower premiums than NFIP. Flood insurance is required by federal law for federally backed mortgages on properties in high-risk flood zones.
Example
After Hurricane Harvey in 2017, homeowners without flood insurance faced average losses of $30,000+ with no coverage. Properties in FEMA-designated Special Flood Hazard Areas (SFHA) that had NFIP policies received average payouts of approximately $90,000 to rebuild — illustrating the critical coverage gap for those without a separate flood policy.