Personal Risk Insights
Weathering the Storm: The Importance of Flood Insurance
MAY 6, 2025
Flooding continues to be one of the costliest natural disasters for U.S. homeowners. In 2024, severe storms and tropical cyclones brought extreme rainfall, causing significant flooding events.
Warmer temperatures and increased atmospheric moisture have led to heavier rainfall, while development near waterways and flood-prone areas has exacerbated the danger. Additionally, drought can make the ground more susceptible to flooding when rain returns, and wildfires can reduce soil’s ability to absorb water, resulting in debris flows and heightened flood risk.1
Homeowners need to know their risk for flooding and proactively take steps to manage it.
Understand Your Risk for Flooding
Most homeowners' policies specifically exclude flood coverage. Before deciding whether you need flood insurance, it's crucial to understand your risk. Although river and coastal flooding are two of the most common causes, flooding can happen anywhere it rains. Heavy rainfall, poor drainage, and nearby construction can put you at risk for flood damage. Check your address on the FEMA Flood Map Service Center to see if your home is in a high-flood-risk area.
Even if your mortgage company doesn't require flood insurance, it doesn't mean your home will not flood. A home is a significant investment, and it’s important to protect your investment by purchasing flood insurance.
Flood Insurance Options
FEMA’s National Flood Insurance Program (NFIP) offerings are limited and often leave homeowners with out-of-pocket expenses. Fortunately, it's not the only option available. Private flood insurance may provide more coverage and cost less than an NFIP policy. Kevin Thomas, Partner and Personal Risk Practice Leader at USI Insurance Services, explains several coverages not included with the NFIP that may be obtained through private flood carriers:
The NFIP pays claims on an actual cash value basis, and private flood coverage pays claims on a replacement cost basis. Replacement cost coverage lets homeowners recover the full repair or replacement cost of damaged property without deducting for depreciation.
The NFIP policy excludes almost all contents in the basement. Private flood insurance carriers may provide coverage for contents in a basement, usually subject to a sublimit.
When a homeowner is displaced due to flooding, additional costs are incurred for temporary lodging while repairs are made. The NFIP will not pay for costs affiliated with temporary housing. Private flood insurance carriers offer loss of use coverage, which helps homeowners recoup some out-of-pocket expenses created by displacement.
The NFIP policy provides $30,000 for modifying a covered home to meet floodplain regulations after a loss. Private flood insurers offer higher limits. Keep in mind, if your home is damaged by flooding, you may be required to rebuild according to local floodplain management regulations. These regulations result in increased repair costs.
The NFIP has separate deductibles for dwelling and contents coverage. Private flood insurance may include a single deductible for both coverages. The single deductible option simplifies the claim process while expanding coverage.
Prevent Flood Loss
As the risk of flooding continues to grow, there are things you can do to mitigate the risk:
- Raise your home on stilts or piers. While expensive, raising your home above base flood level substantially protects it from rising water.
- Install foundation vents or a sump pump. Foundation vents allow flood water to flow through your home, providing it an outlet and relieving pressure on your walls and windows. A sump pump with backup battery is a great option to pump flood water out of the basement. If you lose power, your sump pump will continue to work.
- Apply coatings and sealants. Apply to foundation, walls, windows and doorways to prevent flood water from seeping through cracks in the home.
- Raise electrical outlets, switches, sockets and circuit breakers above base flood level to avoid significant electrical damage.
- Install gate valves on your sewer pipe to protect your home against sewage backup.
- Grade your lawn away from the house. Use heavy soil containing clay or sand to regrade your lawn so water runs off the property into a gutter, versus having water collect around the home.
- Leave space between mulch and siding. Leaving space between mulch and your home will prevent the siding from rotting. Failing to remediate rot allows water intrusion into the home.
- Point your downspouts away from your home. Point gutter runoff away from the home to avoid pools around the home and leaks into the basement.
- Invest in flood barriers. Flood barriers come in various forms, including those that can be permanently installed and those that inflate when they come into contact with water.
How USI Can Help
USI’s personal risk team is available to provide you with a holistic approach to risk management. To learn more about protecting your home from flood or to receive a comprehensive personalized risk management plan, please contact us at personalriskservice@usi.com.
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