Flood insurance may be required by the lender if your home is in a low-lying area and vulnerable to flooding. Your homeowners policy will not cover you for any damage due to flooding.

The National Flood Insurance Program (NFIP) defines flooding as “a general and temporary condition during which the surface of normally dry land is partially or completely inundated. Two adjacent properties or 2 or more acres must be affected.” According to NFIP’s definition, flooding can be caused by any one of the following:

• the overflow of inland or tidal waters
• the unusual and rapid accumulation or runoff of surface waters from any source such as heavy rainfall
• the incidence of mudslides or mudflows caused by flooding which are comparable to a river of liquid and flowing mud;
• or the collapse or destabilization of land along the shore of a lake or other body of water resulting from erosion or the effect of waves or water currents exceeding normal, cyclical levels.

Flood insurance is a special policy backed by the federal government, with cooperation from local communities and private insurance companies. More than eighteen thousand communities have agreed to stricter zoning and building measures to control floods. Residents in these communities are entitled to purchase flood insurance through NFIP. (Those who own property in certain coastal barrier areas are excluded from the federal program.)

About two hundred insurance companies, possibly including the company that already handles your homeowner’s or auto insurance, write and service the policies for the government, which finances the program through premiums. The average flood policy premium is about $350 a year; some people in low-risk zones can obtain flood insurance for as little as $106 a year.

Even though flood insurance is relatively inexpensive, most Americans are unprotected against flood loss. According to the Federal Insurance Administration, of the approximately ten million households in so-called Special Flood Hazard Areas - the most vulnerable to flood - no more than a quarter are covered by flood insurance. Yet in these special hazard areas, flooding is twenty-six times more likely to occur than a fire over the course of a typical thirty year mortgage.