Do I Need Flood Insurance in NYC?

Some things I found out.

Author

Nick Nyhan
May 20, 2024 • Estimated Reading Time: 14 minutes

If you only have a minute…you should know these 3 things about Flood Insurance in NYC:

  1. Regular homeowners / renters insurance won’t cover you if there is a flood, but flood insurance is available at rates set by the Federal Government’s National Flood Insurance Program (NFIP). $52m was paid out just in NY State alone in 2023, even in low risk areas.

  2. When you have flood insurance, you can also get up to $1,000 reimbursement for doing things like buying water pumps, labor to clean drains, sandbags. That might be more than the cost of insurance!

  3. “Seepage” from groundwater is not covered by flood insurance. 

Okay…if you are ready for a bit more, we did some research and have answers to 20 useful questions about flood insurance in NYC below.

Q: What % of people in Brooklyn get flood insurance beyond their building homeowners / renters insurance?  

A: ~20% (according to my local insurance agent in South Brooklyn).

Q: Why should someone in NYC consider getting flood insurance?

A: Two reasons, including one new to me.

  1. What was new to me is that IF you have flood insurance you can get up to $1,000 in reimbursable expenses for water pumps, labor to clean your drains, sandbags…and still have your damages covered.  $1,000 just from receipts. And you may be spending that money anyway, so that alone more than pays for a typical flood insurance policy for a year or more.  More below. 

  2. And the more obvious one: because more water is coming, from above and below.  In 2023, it rained on average every 3 days in NYC  - which has reduced natural water storage areas with more cement - and our sewers were not built for this much runoff. Also, NYC has 520 miles of coastline; surges can really affect us. So if you make use of the basement in your building or have pooling areas, and 1 inch of water can cause up to $25,000 in damage, then flood insurance might make sense, especially if you spend more than $500 a year dealing with flood issues.

Q: What about sewer backup and what is the policy there?

A: Covered, but only if by “flood” vs something else.

  • According to NFIP: “Damage caused by a sewer back up is covered by flood insurance IF the backup is a direct result of flooding.”

  • My insurance broker said it like this: “if it affects multiple properties (2 or more homes) and caused by natural occurrence.” So that is consistent with NFIP.

  • BUT….BUT….IF the sewer backup is NOT caused directly by flooding, the damage is NOT covered under flood insurance. 

Q: Where does “the line” STOP for regular homeowners insurance with regard to flooding?

A: Best to think about homeowners insurance as stopping at the sidewalk level.

  • Regular homeowners /renters insurance will generally NOT cover the items in your basement when flooded. If you have been through a flood before, you know it doesn’t take a lot of water to create a lot of work and cost.

Q: If you have an apartment or hangout place in your basement and keep a couch, computer, TV, down there, are they covered under flood insurance?

A: Many things are covered but NOT those.

  • They would only be covered in a regular homeowners policy IF they were above the sidewalk level.  So if you want them down there, raise them up a bit.

Q: If walls are damaged, is finishing the walls (plaster, painting) covered by flood insurance?

A: Sheetrock, insulation, repair IS covered but NOT taping, sanding, painting.

  • Only replacement (not finishing) and only up to 2 feet above waterline (any higher than that is your cost).

Q: I lived without flood insurance for years, isn’t this just for people in high risk flood zones?

A: Not anymore. That was my POV, but now I’m rethinking it given recent events and what I learned.

  • People outside of high-risk flood areas filed over 40% of all National Flood Insurance Program (NFIP) claims (2014-2018).

  • 1 in 3 flood insurance claims come from LOW and moderate flood risk zones.  Since 1996, flooding has affected 99% of U.S. counties. 

  • Just in NY State in 2023: $52M was paid out by NFIP.  That’s a lot in one year.

Q: How much can flood insurance pay out?

A: The recent national payout average was $52,000, and coverage totals depend on if residential or commercial and if for the building or contents.  

  • I couldn’t find NY specific stats on payouts, but according to Bankrate the recent national average flood claim payout from NFIP was $52,000.

  • For residential owners, you can secure coverage up to $250,000 for the building and $100,000 for the building contents.

  • For commercial owners, you can secure coverage up to $500,000 for the building and $500,000 for the building contents.

Q: I'm a renter who lives in a low, basement apartment, should I get flood insurance?

A: Consider it for your “contents” or possessions, and your landlord should cover the building.

 Q: Why are there two parts to flood insurance: “Building” and “Contents”? 

A: Coverage is separated because there are different rules and different deductibles (which you can choose from in the policy price you select).  

“Building” or structural flood insurance covers for water damages up to 2 feet above highest waterline of a flood event for things like:

  • Sheetrock/insulation 

  • Furnace/heat pump

  • Electrical / plumbing

  • Hot water heater /central AC

  • Built-in appliances like stove, dishwasher (but not clothes washer dryer)

  • Electrical outlets

  • Permanent carpeting

  • Debris removal (that seems also very useful in NYC)

“Contents” flood insurance covers other things (and has a different deductible) for things like:

  • Clothing

  • Furniture

  • Washer/dryer

  • Portable air conditioners you might be storing down there

  • Personal belongings and valuable items like art work up to $2,500

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Q: What defines a “flood” for insurance purposes?

A: Flood insurance would cover a rush of water into the home from the outside in the event of a severe rainstorm and/or coastal flooding. 

  • To be considered a flood, it has to affect at least 2+ properties or 2+ acres in the adjacent area at the same time.

  • Per NY State Gov’t Q&A About Flood Insurance: 

    • “The overflow of inland or tidal waters”

    • “The unusual and rapid accumulation or runoff of surface waters from any source”

  • Note: rain coming through windows or doors is not covered, nor is “seepage.” 

Q: What is “Seepage”and why is that the biggest surprise for people when people try to claim damages from flooding?

A: Seepage is water coming from below.

  • My insurance broker said the biggest surprise is that “seepage” is NOT covered.

  • “Seepage” is water coming into the basement through the foundation, the walls, the floor or a little drain on the floor (99% of those are clogged) is seepage is NOT covered in regular homeowners insurance, NOR is it covered by optional flood insurance.

  • The NFIP defines it like this: “Example of EXCLUDED coverage: any damage caused by seepage, or any subsurface water flow or a condition of flow of water beneath the earth’s surface.”

  • So underground streams, rising water tables (which have been rising in recent years due to more rain), or maybe standing water near your place could be coming in through your older foundation walls or floors. This is NOT covered by flood insurance.  [ Note: we hope to cover underground water sources in another newsletter. ]

Q: What does flood insurance in NYC cost?

A: My own quote was about $500 for the year but it varies based on your place and location.

  • It varies based on your location/flood risk zone, building age and type (private residence, condo, co-op), and what you want for a deductible.  If you call any insurance agent they should get you the federal NFIP-based pricing. 

  • FEMA site to find insurance brokers who provide flood insurance: https://www.floodsmart.gov/flood-insurance-provider

  • You should get a second quote to make sure it is the same and based on FEMA rates, but if you sense something not right, you can always submit a complaint to State Insurance Commissioner here: https://www.dfs.ny.gov/complaint 

Q: Why is there a 30 day waiting period before flood insurance is active?

A: Avoid the pre-storm rush.

  • Because they don’t want lots of people waiting until the last minute and then buying right before a big storm; they want it set up in the periods between flooding events to know what their exposure is.

Q: Should you shop around for best flood insurance rates?  

A: Get two quotes (but they should be the same).

  • Flood insurance rates are set by the federal agencies FEMA and NFIP based on analysis of data and risk where you live. Those policies can be bought anywhere through a regular insurance broker, but all should be the same rates and coverage as determined by your location and “flood zone”risk.

    Think someone else would find this useful? Please share.

Q: What else is NOT covered by flood insurance?

A: A very specific list.

  • Damage from mold, moisture, mildew

  • Living expenses, loss of income from business interruption

  • Cars, bikes, scooters

  • Garden items, plants, trees

  • Important papers (photos, stock certificates) 

  • Water coming from rain through windows, roofs, doors

Q: Is flood insurance required?

A: Generally no, unless you live in higher risk area.

  • Flood insurance is generally voluntary and not required BUT if you live in a high-risk flood zone (blue or tan zones in the FEMA maps below) then it might be required as part of your federally-backed mortgage and/or homeowners insurance. 

Q: How do I know if I live in a flood risk zone?

A: You have a few choices…

FEMA flood risk and zones map: https://msc.fema.gov/portal/home

How to read this FEMA flood risk and zones map:

  • Blue: HIGH risk (mortgage bank or insurance may require add’l flood insurance)

  • Yellow/Tan: MEDIUM risk (mortgage bank or insurance may require add’l flood insurance)

  • No color: LOW risk (not required by recommended)

  • [ NOTE: I only show part of Brooklyn here in order to see colors, which I didn’t see when I zoomed all the way out to Brooklyn overall.  Also, interesting to note that the last update to the data for this area was 2007…17 years ago!  More on that in a future newsletter...]

Q: Does Flood insurance reimburse me for preventative steps I take to prevent flooding?

A: Yes, up to $1,000 according to the FEMA / NFIP “Flood Loss Avoidance Policy.” 

  • I called FEMA to verify this and they said: “Yes it is a ‘thing’…IF you have a policy already in place.”   Here are the reimbursable expenses:

    • Sandbags (including the sand to fill them) 

    • Dirt to create temporary levees

    • Water pumps

    • Plastic sheeting and lumber used in connection with any of these items listed above

    • Labor – you may claim labor, including your own or a family member’s labor, at the federal minimum wage. Labor charged by a professional may also be reimbursed. 

  • Tips: Keep receipts.  Take photos before, during, after.  Submit to the insurance agent like a regular claim. 

  • Policy is here: https://www.floodsmart.gov/flood-risk and see pic below. 

Q: What is the best way to capture damage and submit for a claim?

A: Photos (before, during and after flood) and receipts.

  • But before you jump into any flood water, be sure you are not walking into electrified water first! If not sure, call an electrician.

  • Also take pictures along the walls to show the extent of the damage and length/height of it. 

Helpful links related to NYC Flood Insurance:

Created by State and City gov’t for informing all New York City residents - including people who are renters and in higher vulnerability areas - about how they can protect home and finances:

FloodSmart from Federal Government FEMA / NFIP (various)

We hope this is helpful.  Big topic so sorry it is a little long.

Caveats:

· This is our interpretation but may not be 100% accurate (things also change over time). As we learn more, we hope to update this.

· We are sharing what we find interesting, nobody paid us to cover anything.

· If you have helpful info or pictures/stories to share, please email us [email protected]

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