Why is Flood insurance important?

Flood insurance is important for both homeowners and business owners because standard property insurance policies typically do not cover flood damage. Flooding can occur almost anywhere, not just in high-risk zones, and over 25% of flood claims come from areas considered low to moderate risk. The cost of even minor flooding can be devastating—just one inch of water can cause tens of thousands of dollars in damage. For businesses, flood damage can also result in significant downtime, lost revenue, and costly repairs to equipment or inventory. Homeowners face similar risks, including displacement and structural damage not covered by regular homeowners insurance. With changing weather patterns and aging infrastructure, the risk of unexpected flooding is increasing. Flood insurance provides critical financial protection and peace of mind against one of nature’s most unpredictable threats.

​

A significant proportion of flood insurance claims come from properties located outside high-risk flood zones (A & V):

​

• About 40% of NFIP (National Flood Insurance Program) claims arise in moderate- to low-risk flood areas (zones B, C, X).

• NFIP data from late 2024 shows 39.1% of active policies are in these lower-risk zones, and they account for 30.6% of reported losses valuepenguin.com.

• FEMA notes that over 25% of all flood claims nationwide come from outside designated high-risk zones.​

• A Congressional report found that over 20% of NFIP claims originate from properties outside the 100‑year floodplain (SFHA).

​

Claims Example:

A basement unit in a condominium complex experienced significant surface water intrusion following a period of heavy rainfall. Water pooled around the foundation and eventually seeped into the unit, damaging flooring, drywall, electrical systems, and personal property—totaling over $50,000 in losses. The condominium association's Master Insurance Policy did not include Flood coverage, so no part of the damages was covered. Because the water originated from surface runoff, it was classified as a flood-related event, which standard property policies exclude. Flood insurance could have provided protection in this scenario, covering the damages caused by surface water entering the building.