Why You Probably Need Flood Insurance — Even if You Don't Live Near Water

Over the Fourth of July weekend, parts of central Texas were devastated by flash floods after the region was hit with the equivalent of four months' worth of rain in just a few hours. At least 134 people were killed, and more than 100 are still missing as of press time.

The Texas floods follow similar catastrophic storms that recently have struck places like North Carolina, New York, New Mexico and California — places many people might not expect to be at high risk. Increasingly, these disasters are devastating areas outside traditional flood zones, where homeowners may assume they don’t need special insurance coverage.

But here’s the reality: Most standard homeowners insurance policies don’t cover flood damage, and only a fraction of Americans carry a separate flood insurance policy, leaving millions of households financially vulnerable when storms hit.

Here’s what homeowners need to know about how flood insurance works, who really needs it and why it might be worth having — even if you’ve never worried about it before.

Wait — my homeowners insurance doesn’t cover flooding?

One of the most common misconceptions among homeowners is that their standard insurance policy includes protection against floods. It doesn’t.

While most homeowners insurance policies do cover water damage from sudden, accidental events inside the home (like a burst pipe or a leaking appliance), they generally exclude any damage caused by rising water from outside your home. That includes flooding from heavy rain, storm surges or flash floods.

Even interior leaks aren’t always covered. Gradual damage, such as a bathroom sink that has been dripping for weeks, often falls under wear and tear, which is typically excluded.

To be protected from water that enters your home from the outside, you’ll need a separate flood insurance policy, either through the federally backed National Flood Insurance Program (NFIP) or a private insurer.

“The gap in coverage usually catches people off guard,” says Brian R. Catalano, the vice president of national flood insurance sales and underwriting at AFR Insurance Services.

Unfortunately, many don’t realize it until after a major weather event.

According to Catalano, homeowners often purchase flood insurance only when required by a mortgage lender — usually because the home is in a Federal Emergency Management Agency-designated high-risk flood zone. However, that approach overlooks a growing reality: Approximately 40% of NFIP claims come from outside high-risk areas. And while FEMA's flood maps are gradually being updated to reflect changing risks due to climate change, many still fail to accurately reflect current flood risks — especially when it comes to flash flooding events like those that struck Texas and New Mexico last week.

“If your home is within 100 yards of a high-risk flood zone, the water doesn’t stop at these lines,” says Catalano. “As storms get more intense and flood water rises higher, it’s going to affect more and more properties.”

Who actually needs flood insurance?

Flood insurance is often viewed as something only coastal homeowners or folks living near lakes and rivers need. But in reality, flooding is the most common — and costly — natural disaster in the U.S. Over the past 20 years, 99% of U.S. counties have experienced at least one flood event, according to FEMA.

“Flooding doesn’t stick to flood maps,” says Toni Baugh, senior property claims manager at Allstate. “Even if you’re outside of a high-risk area, factors like changing weather patterns, poor drainage or nearby construction can put you at risk. That’s why we tell homeowners: Don’t assume you’re safe just because your address isn’t on a FEMA map.”

Kerr County — the area hit hardest by the July 4 storm in Texas — sits within a region called Flash Flood Alley, known for its steep terrain and semi-arid soil that doesn't absorb much water. However, an ABC News analysis of FEMA data and satellite imagery found that FEMA maps significantly underestimated the areas true flood risk. In some locations, water surged hundreds of feet beyond the official boundaries of FEMA's designated flood zones.

If you’re unsure about your risk, you can:

• Check FEMA’s flood maps to see your home’s official risk zone.
• Explore the National Risk Index, an interactive tool that shows which communities are most vulnerable to natural disasters.
• Ask an insurance agent or mortgage lender for guidance — but don’t assume they’ll bring it up if you don’t.
• Look up your property’s flood history on real estate websites like Redfin or Realtor.com. Many listings include flood risk data from First Street Foundation, along with whether an NFIP policy is required (and the estimated cost).

What flood insurance covers (and what it doesn’t)

Flood insurance is designed to cover damage caused by rising water from outside your home — that is, any water that touches the ground before it reaches your property.

“The biggest misunderstanding I see when working with homeowners is: ‘Water is water, right?’” says Michelle Youshock, head of personal lines at World Insurance Associates. “But water coverage is not the same as a flood.”

To be covered for that kind of damage, homeowners need a separate flood insurance policy — either through the NFIP or a private insurer. While both offer protection from rising water outside the home, there are key differences in cost and coverage.

Availability

Flood insurance is available through two main avenues: the NFIP — a federally backed program managed by FEMA — or a private insurance company. The NFIP was created in the 1960s to provide coverage in areas where private insurance was either hard to come by or unaffordable, and it's the most widely used option today.

A common misconception is that flood insurance is hard to get, but that’s rarely the case, according to Catalano.

“Because of FEMA and the NFIP, just about every property is eligible for flood insurance, with minor exceptions in rural communities that don't participate,” says Catalano. That means unless your community has opted out of the program, you should be able to purchase a policy through the NFIP.

The alternative is private flood insurance, which is offered by a growing number of insurers. Private flood policies are often cheaper for homes in areas of low-to-moderate risk. They're also more flexible, with coverage limits that can exceed the $250,000 cap for NFIP policies. However, private insurers aren't required to cover every property (especially high-risk ones).

Coverage limits

NFIP policies cap coverage at $250,000 and personal property coverage at $100,000, meaning that's the maximum you can be reimbursed in the event of disaster. That may not be enough for you and your family. That’s where private insurance comes in.

“If you have a higher-value home, you should consider private coverage,” says Youshock. "The NFIP is very limited, and the policies are standardized, where private flood policies are more customizable and offer broader coverage options."

Both NFIP and private policies generally cover:

• Structural damage to your home
• Electrical and plumbing systems
• Appliances (refrigerators, stoves and built-in appliances like dishwashers)
• Foundation walls, anchorage systems and staircases
• Detached garages
• Fuel tanks, well water tanks and pumps
• Solar energy equipment
• HVAC systems

NFIP policies typically don’t cover:

• Additional living expenses if you’re displaced
• Basement contents (contents coverage must be purchased separately)
• Detached structures like sheds, gazebos and other outbuildings (these typically require a separate flood insurance policy)

Some private insurers offer more comprehensive coverage — including coverage for temporary living expenses, also known as Additional Living Expenses (ALE) or Loss of Use coverage. This can help cover costs like hotel stays, meals and other essentials if you're displaced while your home is being repaired after a flood.

Waiting period

NFIP coverage has a standard 30-day waiting period before a new flood policy takes effect, so acting early is key, says Baugh.

Private insurers often have shorter waiting periods — sometimes as short as seven to 14 days — which can be helpful for last-minute protection (but they still do not offer same-day coverage).

How much does flood insurance cost?

Flood insurance premiums can vary significantly depending on where you live, your home’s elevation, building materials, number of floors, and the type of policy and deductible you choose.

For residential properties, the average annual premium through the NFIP typically ranges from $800 to $3,500 a year, according to the Flood Insurance Guru. However, your rate could be higher or lower depending on your risk factors.

Private insurance is typically competitive with NFIP rates but can sometimes be more expensive — especially in high-risk areas or if the policy includes higher coverage limits and added protections like temporary housing.

In recent years, FEMA’s Risk Rating 2.0 system has shifted how the NFIP calculates premiums. Instead of relying solely on broad flood zones, the new pricing model — which began rolling out in 2021 — assesses each property's individual risk. Factors such as the home's distance to the water, flood frequency in the area, foundation type and the estimated cost to rebuild all play a role in determining your rate.

“Risk Rating 2.0 has been a step in the right direction over the past few years,” says Michael Richmond-Crum, senior director of personal lines at the American Property Casualty Insurance Association.

However, the NFIP’s authority is set to expire on Sept. 30, 2025, and requires a long-term reauthorization from Congress. If there’s a lapse, NFIP won't be able to sell new or renew flood insurance policies after the September deadline. Existing policies will remain in effect until their expiration date.

“Since the last [reauthorization] passed over a decade ago, the program has seen 33 short-term extensions with multiple lapses and reimbursement delays,” says Richmond-Crum. “This instability discourages private investment in flood insurance, even as demand continues to rise.”

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