Flood Insurance: What Does It Cover and How Much Does It Cost?

By Leigh A. Morgan

October 02, 2025

When it rains, it pours. Sometimes it even floods. Unfortunately, many homeowners don't think about flood insurance until water is already seeping into their basements. Standard insurance policies generally don't cover flood damage, making extra coverage critical for homeowners and renters in flood-prone areas. Knowing about flood insurance costs and coverage can help you avoid drowning in flood-related expenses later.

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What Is the Purpose of Flood Insurance?

Flood insurance provides extra protection against flood-related damage. These policies cover the cost of repairing or replacing your property, reducing the financial risk associated with living in a flood-prone area. The price you pay for coverage is a lot less than it would cost you to rebuild your home or replace your personal property.

Who Needs Flood Insurance?

Homeowners are required to purchase flood insurance if they use a mortgage backed by the federal government to buy a home in one of these areas:

A, AE, AH, AO, AR and A99 zones: Homes in these zones are at risk of flooding due to their proximity to ponds, rivers, streams or protective barriers under construction.
V and VE zones: The Federal Emergency Management Agency (FEMA) uses V and VE classifications for homes in high-risk coastal areas. These homes have an even higher risk of flooding due to storm waves.

A federally backed mortgage is a loan guaranteed by the U.S. Government. The Federal Housing Administration (FHA), Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA) are examples of federal agencies offering home loan programs. If you have an FHA, VA or USDA loan, you'll have to purchase flood insurance if you want to buy a home in a high-risk area.

Even if your lender doesn't require flood insurance, it's still a good investment if you live in an A or V zone. You might also benefit from purchasing flood insurance if your home is in a low- or moderate-risk area. According to the National Flood Insurance Program (NFIP), these areas account for 40% of all flood claims. The risk of flooding may be lower, but it's not nonexistent.

What Are Flood Zones? How Do They Affect Flood Insurance?

A flood zone is a geographic area with a certain level of flood risk as determined by FEMA. The agency uses several tools to determine the risk of flooding. For example, engineers use hydraulic models to map the flow of water based on the presence of hills, mountains, valleys, buildings and bodies of water. FEMA also relies on flood hazard analysis to estimate the likelihood of storm surges and other flood-related hazards.

Your flood zone has a big impact on your flood insurance cost, as insurers use flood risk to calculate your premium. The higher the risk of flooding, the higher your premium is likely to be. For example, homes in Zone A are likely to have the highest premiums due to the heightened risk of flooding. You can use FEMA's flood zone maps to determine if you're in a high-risk zone.

What Does Flood Insurance Cover? What Doesn't It Cover?

Flood insurance typically comes with building and contents coverage. Building coverage applies to your home's structure, along with built-in appliances and permanently installed features. For example, flood insurance covers plumbing and electrical systems, permanently installed carpeting and cabinets, foundation walls, furnaces and water heaters. It also covers detached garages.

Contents coverage, also known as belongings coverage, applies to the things you keep inside your home. This includes clothing, furniture, electronics, window air conditioners and carpeting installed over wood floors. These policies also provide limited coverage for artwork, furs and other valuable items.

Flood insurance kicks in if covered items are damaged directly by flooding. For example, if water fills your basement and causes your water heater to malfunction, your policy should cover the cost of replacement. Flood insurance may also cover damage caused by mud flowing through your home as a result of a flood. Note that mudflows are different from mudslides, which aren't covered.

Common Exclusions

Flood insurance doesn't cover any damage that isn't caused by flooding. These policies also have some common exclusions:

Damage caused by landslides and mudslides
Loss of use of your property
Cash, stock certificates and precious metals
Damage caused by mildew, mold or moisture that isn't related to a flood or could've been prevented by the homeowner
Temporary housing and other living expenses
Trees, decks, wells and other items outside an insured building
Water backups from drains or sewers
Rain blown in from above (e.g., through a damaged roof)

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How Much Does Flood Insurance Cost?

Flood insurance costs vary depending on the location and age of your home and the type of coverage you choose. Certain home features, such as elevated utilities, can help you qualify for lower rates. According to FEMA data, the annual cost of flood insurance ranges from $689 to $13,477 per year, based on risk level.

Homes with the lowest premiums have the lowest exposure to storm surges, coastal erosion and other hazards. In contrast, homes with the highest premiums have significant exposure to flood-related risks. For example, 96.8% of homes with premiums exceeding $13,000 per year have exposure to storm surges.

Can You Be Denied for Flood Insurance?

Private insurance companies can deny your application if your home is in a high-risk area. Even if you're approved for a flood policy, your insurer can deny your claims for several reasons, such as late filing or failure to comply with policy requirements.

The National Flood Insurance Program can deny you if you live in a property that's been declared to violate laws designed to limit development in flood-prone areas.

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