Here's something that catches most homeowners off guard: your regular home insurance policy doesn't cover floods. Not even a little. And while you might think flood insurance is only for people living near coastlines or rivers, the reality is far more surprising. In 2024, about 40% of flood claims came from properties outside FEMA's designated high-risk zones. That means if you've been telling yourself "I don't live in a flood zone, so I'm fine," you might want to reconsider.
The question isn't really whether flooding could happen to you—it's whether you're prepared to cover tens of thousands of dollars in damage if it does. Let's break down who actually needs flood insurance, what it costs, and how to figure out if it makes sense for your situation.
When You're Required to Have Flood Insurance
If you have a federally backed mortgage and your home sits in a Special Flood Hazard Area (SFHA), flood insurance isn't optional—it's mandatory. This includes conventional loans backed by Fannie Mae or Freddie Mac, FHA loans, VA loans, and USDA loans. The law requires your lender to make sure you're covered before they'll approve your loan.
What counts as a Special Flood Hazard Area? These are zones designated by FEMA as having at least a 1% annual chance of flooding—what's commonly called the "100-year floodplain." On FEMA maps, these show up as zones beginning with the letters A or V. If you're buying a home in one of these areas, your lender will require you to purchase flood insurance before closing.
Your lender will typically require coverage equal to the lesser of three amounts: your home's full replacement cost, the maximum coverage available through the National Flood Insurance Program ($250,000 for the structure), or your outstanding mortgage balance. Some lenders may require even more coverage than the minimum, especially if your home is worth significantly more than the NFIP cap.
Why You Might Need It Even If It's Not Required
Here's where things get interesting. From 2014 to 2024, nearly one-third of National Flood Insurance Program claims came from properties outside high-risk flood zones. In some states, it's even more dramatic—85.6% of flood losses in Washington D.C., 81.3% in Utah, and 61.6% in Wyoming occurred outside designated high-risk areas. And according to a 2025 report, 77% of at-risk homes outside FEMA flood zones have no flood insurance at all.
Why does this happen? FEMA's flood maps focus on coastal flooding and major waterways, but they don't always account for flash floods from severe storms, inadequate drainage systems, or rapid snowmelt. Climate patterns are changing, too—areas that were historically safe are experiencing more frequent and severe flooding events. Your neighborhood might be in a zone marked B, C, or X (moderate to low risk), but that doesn't mean you're immune.
Consider this: over a 30-year mortgage, your home is five times more likely to experience flood damage than fire damage. Yet most people carry fire insurance without question while skipping flood coverage. The average flood insurance claim paid out by the NFIP in 2024 was $33,905. Could you afford to cover that out of pocket?
What Flood Insurance Actually Costs
The national average premium for flood insurance is $898 per year as of March 2025, but your actual cost depends heavily on your location and risk level. If you're in a moderate- to low-risk area, you might pay less than $400 annually—often less than $35 per month. That's pretty reasonable protection against a disaster that could cost you tens of thousands.
Properties in high-risk zones pay significantly more—about 59% more on average than moderate- to low-risk areas. If you're in a Special Flood Hazard Area, expect to pay somewhere between $700 and $2,000 or more per year depending on your home's elevation, construction, and proximity to water. FEMA implemented a new rating system called Risk Rating 2.0 that calculates premiums based on your specific property's characteristics rather than just its flood zone, which means two neighbors in the same zone might pay different rates.
One important thing to know: NFIP policies have coverage caps. You can get up to $250,000 for your home's structure and $100,000 for your belongings. If your home is worth more than that—and the median home sale price in America is $422,400—you'll want to look into excess flood insurance from private insurers to cover the gap. Private flood insurance can also sometimes offer more competitive rates than the NFIP, so it's worth shopping around.
How to Decide If You Need Coverage
Start by checking your property's flood zone. You can look this up on FEMA's Flood Map Service Center using your address. This will show you whether you're in a high-risk area (A or V zones), moderate-risk area (B or X zones), or low-risk area (C or X zones). But remember—the map is just a starting point.
Ask yourself some practical questions. Has your area experienced flooding in the past, even if it wasn't classified as a flood zone then? Does water pool in your yard or street after heavy rain? Are you near a storm drain or in a low-lying area? Is your neighborhood experiencing more intense storms than it used to? These real-world observations matter just as much as the official maps.
Also consider your financial situation. If a $30,000 repair bill would be devastating—and let's be honest, it would be for most people—then spending a few hundred dollars a year on flood insurance is a smart move. Think of it like car insurance: you hope you'll never need it, but you'd never drive without it. Your home is likely your biggest investment. Protecting it comprehensively just makes sense.
Getting Started with Flood Insurance
If you decide flood insurance makes sense for you, you can purchase it through the National Flood Insurance Program via most insurance agents and companies, or you can explore private flood insurance options. Be aware that there's typically a 30-day waiting period before your policy takes effect, so don't wait until a storm is forecast to buy coverage.
Get quotes from multiple sources. Contact your current homeowners insurance agent first—they can often add flood coverage easily. Then check with a few other insurers and compare both NFIP and private market options. The coverage might be similar, but pricing and customer service can vary significantly.
The bottom line? Flood insurance isn't just for coastal properties or homes next to rivers. With climate change bringing more extreme weather and nearly 40% of claims happening outside high-risk zones, it's worth serious consideration regardless of where you live. A few hundred dollars a year is a small price to pay for peace of mind—and financial protection—when the unexpected happens.
