Flood Insurance Basics

Flooding is the most misunderstood—and most financially devastating—gap in home insurance. Homeowners policies do not cover rising water. Not sometimes. Not partially. Never. Every major storm proves this when thousands of homeowners learn the hard way that they needed a separate flood policy.

If you’re unsure which parts of your home would actually be protected during water damage, review the breakdown of dwelling coverage to understand where standard policies draw the line.

1. What Counts as a “Flood” (FEMA’s Definition)

Flood insurance only triggers when water meets FEMA’s official definition of a flood. That definition is strict:

• Water covers at least two acres of normally dry land, or
• Water affects at least two properties (yours + another)

The key is rising water from outside. If water comes up from the ground, the street, or nearby drainage—it’s a flood. Homeowners insurance will deny it 100% of the time.

2. What Flood Insurance Actually Covers

Flood insurance focuses on damage directly caused by rising water. It does not behave like a homeowners policy—coverage is narrower and more defined.

• Foundation and structure
• Electrical and plumbing systems
• HVAC, water heaters, and furnaces
• Flooring, walls, and insulation
• Appliances (if on the approved list)

Personal property is covered only if you add contents coverage, and even then, the list is limited. For a better understanding of how belongings are normally covered, see personal property coverage.

3. What Flood Insurance Does NOT Cover

Flood policies have hard exclusions. These are the ones that surprise homeowners the most:

• Basement improvements (carpet, drywall, finished walls)
• Personal property stored in a basement
• Temporary housing costs (ALE is not included)
• Landscaping or exterior structures not attached to the home
• Mold, unless directly caused by a covered flood and mitigated quickly

Flood insurance is designed to stabilize a structure—not restore luxury finishes or basement conversions.

4. The Two Sources of Flood Policies: NFIP vs Private

You can buy flood insurance from:

• NFIP (FEMA) — standardized coverage, strict limits
• Private insurers — often higher limits and broader protection

NFIP is predictable but capped. Private flood fills gaps that FEMA will never touch. If your home is high-value or fully finished, private flood may be necessary.

5. Elevation, Zoning, and Risk: Why Your Premium Looks the Way It Does

Flood insurance pricing is cold, math-driven, and based on actual risk factors:

• Elevation above base flood level
• Distance to rivers, washes, or drainage paths
• Past flood events in your zone
• Foundation type (slab, crawlspace, basement)

Risk-based pricing means that even people “outside the flood zone” can flood—and increasingly do. Storm intensity makes the old maps outdated.

6. Why You Probably Need Flood Insurance Even If It’s Not “Required”

FEMA’s own data is brutal: 25% of all flood claims come from low- and moderate-risk zones. These homeowners thought they were safe until one storm overwhelmed local drainage and pushed water into neighborhoods that hadn’t flooded in decades.

• A single inch of water can cause $20,000+ in damage.
• FEMA and homeowners insurance will not cover rising water.
• Disaster assistance—if offered—is usually a small loan, not a payout.

Flood insurance is one of the only ways to stop a water disaster from turning into financial ruin.

7. When to Reevaluate Your Flood Risk

• After new construction or development alters drainage
• After severe storms or “100-year” events nearby
• After changes in FEMA flood maps
• Anytime your home value increases significantly

Risk changes. Your coverage should too.