While natural disasters vary by season and region across the U.S., many property owners are still caught off guard by just how widespread—and costly—flood and water damage can be when a powerful storm strikes their homes, businesses, and communities.
That’s often because insurance policies don’t cover what policyholders assume they do—or believe they ought to.
The unwelcome surprise for many homeowners is that, while standard home insurance covers fire and wind damage, it typically excludes events like floods and earthquakes—risks that usually require separate, specialized policies.
Here’s what you need to know about flood insurance.
Who has flood insurance
In most cases, those who carry flood insurance do so because it’s required.
While flood insurance is optional for many property owners, it’s mandatory for those with government-backed mortgages on properties located in high-risk flood zones designated by the Federal Emergency Management Agency (FEMA). In fact, many private lenders also require it in these vulnerable areas.
However, since most private insurers do not offer flood coverage, the National Flood Insurance Program (NFIP), administered by FEMA, remains the primary source of protection.
Over fifty years ago, Congress established the federal flood insurance program in response to many private insurers withdrawing coverage from high-risk regions.
FEMA’s Flood Map Service Center offers an online tool to help you assess your area’s flood risk. According to FEMA, even a 1% annual chance of flooding is classified as high risk, as it translates to a 1-in-4 likelihood of flooding over the course of a 30-year mortgage.
Who doesn’t have flood insurance
Homeowners in high-risk areas who are advised to carry flood insurance sometimes choose to forgo it. Those who pay off their mortgage may discontinue coverage once it’s no longer mandatory, and buyers who purchase a home or mobile home with cash might decide not to obtain flood insurance at all.
The rest of us are essentially taking a gamble, despite longstanding expert warnings that flooding can occur almost anywhere. Flood damage isn’t limited to rising waters—it also includes runoff from banks, mudflows, and intense rainfall.
Mark Friedlander, spokesperson for the Insurance Information Institute, an industry organization, noted that only about 6% of U.S. households carry flood insurance—mostly in coastal regions vulnerable to hurricanes. This percentage has remained steady in recent years, despite the rising frequency of severe flooding, including in areas not officially designated as high risk by the government.
“Lack of flood coverage is the largest insurance gap across the country,” Friedlander said in an email. “Ninety percent of U.S. natural disasters involve flooding and flooding can occur just about anywhere it rains.”
What flood insurance covers
Even when homeowners carry flood insurance, the coverage often falls short of fully restoring them after a loss.
FEMA’s National Flood Insurance Program provides coverage up to $250,000 for single-family homes and $100,000 for personal belongings. Renters can obtain up to $100,000 in contents coverage, while commercial flood insurance offers protection up to $500,000.
There are growing concerns that these flood coverage limits are insufficient, particularly as climate change intensifies hurricanes and causes storms to become wetter, slower, and more likely to escalate rapidly.
Typically, those without flood insurance who face a major storm may attempt to claim compensation through their standard homeowners policy, but often find themselves embroiled in disputes over whether the damage was caused by wind, rain, or the contentious "wind-driven rain".
Don Hornstein, an insurance law expert at the University of North Carolina, explained that while the distinction between wind and water damage is subtle, technical specialists can clearly determine the cause. However, if the evidence is inconclusive, the law typically favors the insurance company.
“If the house was simultaneously destroyed by flood and, concurrently (by) wind, it’s not covered by private insurance,” Hornstein said.
Photo: An American flag sits on a destroyed bridge over the Guadalupe River in Kerrville, Texas on July 9, 2025. (AP Photo/Gerald Herbert)
