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California flood insurance

Residential area in California suburbs that has been flooded
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According to the Insurance Information Institute, 90% of natural disasters in the United States involve some sort of flooding, and 20% of flood claims are filed by homeowners who live in areas categorized as low to moderate flood risk.

If you are a renter, you can protect your personal belongings with a renters insurance policy, and if you own a home, you can protect your dwelling and its contents with a homeowners policy. But do these types of policies cover losses caused by flooding?

Generally, no.

Flood insurance is typically sold as a separate insurance policy. Many flood insurance policies are administered by the National Flood Insurance Program (NFIP), a division of the Federal Emergency Management Agency (FEMA), but there are private insurance carriers who offer flood insurance policies.

Why California homeowners need flood insurance

Most standard home insurance and renters insurance policies do not cover losses caused by floods. According to FEMA, between 1996 and 2019, 99% of U.S. counties suffered flood events. In the same timeframe, the NFIP paid an average of $18,400 per claim to California flood insurance policyholders. In 2019, FEMA reported nearly 200 California flood events, up from 150 in 2018.

One of California’s worst flood events occurred during the American Civil War. From late 1861 through early 1862, heavy rainfall caused major flooding throughout the state, pouring nearly 30 inches of rain on San Francisco alone, killing a rumored 1,000 people. In 1978, a winter storm made landfall in Central and Southern California, dumping more than 13 inches of water in a single day in some areas. The storm led to 18 fatalities and caused $120 million in damages.

Over the years, populations have grown, and property values have risen in flood-prone areas. According to the Public Policy Institute of California, flood risk is increasing. However, flood management budgets remain stagnant. The Institute estimates that The Golden State needs to spend more than $30 billion to upgrade flood management infrastructure, including dams and levees.

Cost of flood insurance in California

According to FEMA, American homeowners paid an annual average of $700 for flood insurance in 2019. Currently, the NFIP sets rates based on the property type and the zone in which a property is located. Rating factors vary according to zone and currently include:

  • Types of property: The NFIP assesses the risk to commercial and residential properties differently. The NFIP limits dwelling coverage of homes to $250,000 and allows up to $100,000 in personal property coverage. The program extends up to $500,000 in building coverage and $500,000 for contents on commercial properties.
  • Location: For homes located in coastal regions, the NFIP may consider the age of the structure when rating. A coastal home’s elevation may also factor into its flood insurance rate. In locations prone to mudslides, the NFIP may consider special features of a home, such as a basement, to help determine the cost of insurance.
  • Replacement cost: A home’s replacement cost can play a significant role when assessing flood risk. Attached structures, like wood decks, can increase a home’s rebuilding cost. Likewise, elements such as a seawall on a coastal property can add significant rebuilding expenses.
  • Loss history: Homes in areas considered to be at a lower risk for flooding may qualify for a preferred policy. Prior flood claims may affect the premium offered for flood insurance.

In October 2021, FEMA will redesign the way it assesses flood risk for NFIP premiums. Called Risk Rating 2.0, the new methodology will focus on three factors: the property’s proximity to the coast or other flooding source, the types of flood risks and the property’s rebuild cost.

When to purchase flood insurance

NFIP policies have a 30-day waiting period. If you decide to buy flood insurance based on an inclement weather forecast, the insurer may deny a claim if disaster strikes within the first 30 days of coverage.

The 30-day waiting period does not apply if you buy a flood insurance policy while refinancing your home or if you renew an existing policy and change its coverage level. The insurer may also waive the 30-day waiting period if your property is flooded following a wildfire on adjacent federally owned land. If your area is newly deemed a high-risk flood zone, you can qualify for a one-day waiting period, but only if you purchase a flood insurance policy within 13 months of the designation.

NFIP policies have a one-year term, with a 30-day grace period at the end of the term. The NFIP will honor a claim filed during the grace period if you pay the renewal premium.

How to purchase flood insurance in California

Finding California flood insurance is not difficult. Start by accessing the flood insurance provider lookup tool on the NFIP website. Currently, FEMA lists 20 California flood insurance carriers, including major insurers such as Allstate, Farmers, Liberty Mutual and USAA. If you already carry homeowners or renters insurance, contact your agent to inquire about flood insurance. However, NFIP flood insurance policies sold by insurers are subject to the availability, terms and conditions of the NFIP.

Frequently asked questions

Is flooding covered by homeowners insurance?

Most standard home insurance policies do not cover losses caused by flooding. You can buy flood insurance to cover your home and its contents. Renters and condo owners can also purchase flood insurance.

Is flood insurance more expensive than homeowners insurance?

The rates you pay for homeowners insurance and flood insurance depend on several factors, including your home’s age, location, loss history and replacement value. A flood insurance policy may be more or less expensive than your homeowners insurance policy, depending on your home’s individual characteristics, location and flood risk. In 2018, California homeowners paid an average home insurance premium of $1,073, according to the Insurance Information Institute. According to the NFIP, in 2019, American homeowners paid an average flood insurance premium of $700.

What does flood insurance cover?

You can purchase flood insurance to cover your home’s structure and its contents. However, building coverage and contents coverage are separately insured and have separate deductibles. The building coverage portion of a flood insurance policy generally covers areas of your home such as its structure and foundation, electrical and plumbing systems, kitchen appliances and detached garages. Contents coverage protects you from financial loss for items such as clothing, electronic equipment and furniture.

Written by
Michael Evans
Former Personal Finance Contributor
Michael Evans is a former contributor to Bankrate and has worked in numerous industries, including education, finance, government, insurance and journalism. He began writing professionally while working for the world's first online mortgage brokerage in San Francisco, California. His writings have appeared in print and online publications, including Fox Business, International Living, Motley Fool and Yahoo Finance. He and his family divide their time between residences in Northern California and Colombia. When Michael is not writing, he enjoys working in his photography business and playing with his cat, Cyndi Lou.