Do I Need Flood Insurance? 10 Things to Know Before You Decide
Key Takeaways:
- Your homeowners insurance policy does not cover flood damage, so a separate flood insurance policy is the only way to make sure you’re truly protected.
- Even if you’re in a low risk flood zone, around 25% of all flood insurance claims come from properties outside of high risk flood areas.
- There is a 30-day waiting period on most flood policies, so don’t wait until a storm is in the forecast to start shopping for coverage.
If you’re buying a home near the coast in the Carolinas, flood insurance is likely one of the first things on your mind. After wind and hail of course. The team at The Huneycutt Group helps homeowners navigate flood coverage every day, and we’re here to make it feel a lot less overwhelming.
Give us a call to see if flood insurance is right for you.
1. What Is Flood Insurance, Exactly?
Flood insurance is a separate policy from your standard homeowners insurance that specifically covers damage caused by flooding. Most homeowners insurance policies do not cover flood damage, which catches a lot of new homeowners completely off guard.
We’ll help you buy flood insurance through the National Flood Insurance Program (NFIP), which is backed by the federal government and administered by the Federal Emergency Management Agency (FEMA).
We also have private insurance companies offering flood insurance options that may provide more flexibility or broader coverage depending on your situation.
2. Wait, My Homeowners Insurance Doesn’t Cover Flooding?
This is one of the most common misconceptions in real estate, and it’s an expensive one to get wrong. Your primary homeowners insurance policy covers many perils, but flooding is almost never one of them.
Whether the flooding comes from a hurricane, a heavy rain event, or the rapid accumulation of stormwater, you need a separate flood insurance policy to be protected. Don’t assume your homeowners insurance policy has you covered without reading the fine print carefully.
3. Do I Need Flood Insurance If I’m Not in a High Risk Flood Zone?
Here’s one of the most frequently asked questions we hear: “But I’m not in a flood zone, do I really need it?” The short answer is that everyone lives in a flood zone of some kind.
FEMA flood maps divide all land into risk flood zone categories, from high risk flood zones to moderate and low risk flood zone designations.
If you’re in a low risk zone, you are not required to carry flood insurance unless your lender says otherwise. But here’s what’s worth knowing: FEMA estimates that around 25% of all flood insurance claims come from properties in low risk areas. Low risk doesn’t mean no risk.
4. My Real Estate Agent Said I Could Skip It to Save Money. Is That True?
A real estate agent may mention skipping flood coverage as a way to lower your monthly costs, especially if you’re in a low risk flood zone. And yes, if you’re not in a special flood hazard area and you don’t have a federally backed mortgage, no one can legally require flood insurance from you.
But think about what you’re actually saving versus what you’re risking. Flood insurance cost is often much, much lower than people expect, particularly in low risk areas, while flood damage repairs can run tens of thousands of dollars. An insurance agent who knows coastal North Carolina can help you weigh that decision honestly.
5. Understanding Flood Zones Around Wilmington, NC
FEMA flood maps assign every property a flood zone designation, and in the Wilmington area, several of these zones are relevant to homeowners.
Zone AE
Zone AE is the most common high risk flood zone designation in New Hanover County. Properties here are in special flood hazard areas, meaning there’s a 1% or greater annual chance of flooding. If you have a federally regulated or insured lender, you are required to carry flood insurance in Zone AE.
Zone VE
Zone VE applies to coastal areas subject to wave action in addition to flooding, and these are the highest risk flood zones in our area. Homes near the oceanfront in Wrightsville Beach or Carolina Beach are sometimes in Zone VE, and flood insurance coverage requirements are strict.
Zone X (Shaded)
Zone X (Shaded) represents moderate flood risk areas, typically between the 100-year and 500-year floodplain. Flood insurance isn’t required here, but it is strongly encouraged.
Zone X (Unshaded)
Zone X (Unshaded) is considered a low risk flood zone with minimal flood risk. Flood insurance is optional, but still available and often affordable.
You can look up your property’s flood zone designation at msc.fema.gov using your address (zoom in slightly to see the zone). When in doubt, your insurance agent can pull this information for you quickly.
6. What Does a Flood Insurance Policy Actually Cover?
A standard NFIP flood insurance policy is split into two parts: building coverage and contents coverage. Building coverage protects the physical structure of your home, including foundation walls, electrical systems, water heaters, built-in appliances, and HVAC equipment.
Contents coverage protects your personal belongings inside the home, things like furniture, clothing, and electronic equipment. These are purchased separately, so make sure you’re asking about both when you buy flood insurance.
7. How Much Does Flood Insurance Cost?
Flood insurance cost varies based on your flood zone, your home’s elevation, the age of the structure, and how much coverage you select. In lower risk areas, policies through the NFIP flood insurance program can be quite affordable, sometimes just a few hundred dollars per year.
FEMA updated its flood insurance pricing model with a program called Risk Rating 2.0, which aims to price policies more accurately based on individual property flood risk. A local agent at The Huneycutt Group can walk you through what your specific property risk level means for your premium.
8. Is There a Waiting Period?
Yes, and this is critical. If you purchase flood insurance through the NFIP, there is typically a 30-day waiting period before your flood policy takes effect. If a storm is already named and heading toward your area, it is too late to buy coverage and have it apply to that flood event.
This is one of the biggest reasons insurance agents encourage homeowners to review and purchase flood coverage well before hurricane season, which runs May through November in coastal North Carolina.
9. Can I Buy Flood Insurance Outside of the NFIP?
Yes. Private insurance companies offer private flood insurance that can sometimes provide higher coverage limits or broader protection than the standard NFIP policy. These policies may be worth exploring if your home has a high replacement cost or you want contents coverage that goes beyond what the NFIP offers.
National Flood Insurance Program (NFIP) caps coverage for residential buildings at $250,000 and $100,000 for personal contents. Non-residential or commercial properties are capped at $500,000 for buildings and $500,000 for contents.
10. How Do I Know If I’m Eligible to File a Flood Insurance Claim?
To file a flood insurance claim, the damage has to be caused by a flooding event as defined by your policy, meaning an excess of water on normally dry land affecting two or more properties or two or more acres. Damage from a leaky roof or a burst pipe doesn’t qualify, but storm surge, overflow from a nearby body of water, and rapid accumulation of rainfall typically do.
Ready to Figure Out If Flood Insurance Is Right for You?
Figuring out whether flood insurance is right for your home doesn’t have to be stressful. The Huneycutt Group works with homeowners across Wilmington and coastal North Carolina to find flood insurance coverage that fits both your property and your budget.
Reach out to our team today to see if it’s right for you.
Also Asked Questions About Flood Insurance
Does flood insurance cover my basement?
Coverage for basements is limited under an NFIP flood insurance policy. The NFIP covers certain items in basements like water heaters, electrical systems, and anchorage systems, but personal belongings stored in a basement are generally not covered under contents coverage.
How much flood damage does it take to file a claim?
Flood insurance claims can be filed for any covered flood damage, even from just one inch of water inside your home. FEMA notes that just one inch of water can cause thousands of dollars in damage, which is why even low risk flood zone residents are encouraged to consider coverage.
Can renters buy flood insurance?
Yes, renters can purchase a flood insurance policy that covers their personal belongings through contents coverage. The building itself would be covered under the landlord’s separate flood policy.
What’s the difference between flood insurance and water damage coverage on my homeowners policy?
Homeowners insurance may cover sudden and accidental water damage, like a burst pipe, but it does not cover flood damage caused by an outside flood event. A separate flood insurance policy is required to cover buildings and contents from flooding caused by rising water, storm surge, or rapid accumulation of rainfall.
How do I find out if my lender requires flood insurance?
If you have a federally backed mortgage and your property is in a high risk flood area or special flood hazard area, your insured lender is required by law to require flood coverage. Check your loan documents or ask your insurance agent to review your flood zone status alongside your mortgage terms.
