Guide to Flood Insurance in New Jersey

Many homeowners make the mistake of overlooking flood insurance until it’s too late. Since a standard homeowners insurance policy doesn’t include protection against flood damage, many homeowners don’t realize they’re missing the coverage they need.

A recent Insurance Information Institute poll found that only 27% of homeowners carry flood coverage.1

This type of coverage is especially important for New Jersey residents, as New Jersey is one of the five states responsible for 67% of National Flood Insurance Program damage claims since 1978.2

Here’s what you need to know about flood insurance in New Jersey.

The risk of flooding in New Jersey

Many of New Jersey’s densely populated urban centers lie in flood-prone areas. In fact, around 54% of the state’s total population lives in flood-prone coastal areas, according to the Rutgers New Jersey Climate Change Resource Center.3

The Garden State ranks in the top five states for damage claims filed with the NFIP. Some of the most memorable flooding events in the state included Tropical Storm Irene and Superstorm Sandy, which each caused billions of dollars in damage.4

But a hurricane doesn’t need to occur for your home to be at risk of flood damage. It’s possible to experience flooding caused by heavy rain or melting snow, for example.

How to determine your flood zone

Everyone technically lives in a flood zone. But where you live has a big effect on how likely it is that you’ll experience a flood. To understand your property’s level of risk, visit FEMA’s Flood Map Service Center. You can search for your property’s address to determine what type of flood zone you live in.

Here’s a breakdown of how your flood zone designation correlates with your risk of experiencing a flood:

• Zone A has a 1% or more chance of annual flooding.

• Zone AE replaces the old numbered A zones and is subject to a 1% or more chance of flooding.

• Zones AH and AO fall under the 1% or more risk of annual flooding and typically have average flood depths of one to three feet.

• Zone AR has a temporarily increased flood risk from ongoing restoration of the flood protection system.

• Zone A99 has a 1% or greater chance of flooding annually but will be protected by the federal flood protection system.

• Zone V is found in coastal areas. It has a 1% or greater annual chance of flooding and can experience storm-induced waves.

• Zones VE and V1 to V30 are in coastal areas and have a flood risk of 1% or more along with storm-induced waves. Zone VE is replacing previously numbered V zones.

• Zone D might have a flood risk, but it’s undetermined.

• Zone X, if shaded, is replacing Zone B. These areas have a moderate flood risk.

• Zone X, if unshaded, is replacing Zone C and has minimal flood risk.

How the NFIP works in New Jersey

The National Flood Insurance Program (NFIP) is available through the Federal Emergency Management Agency (FEMA). It allows homeowners across the country, including those in the Garden State, to purchase relatively affordable flood insurance.

The NFIP lets you purchase federal flood insurance, regardless of how likely your home is to flood.

While some homeowners can purchase insurance directly through the NFIP, most federal flood insurance is sold through Write Your Own (WYO) companies. When you work with a WYO company, the policy is guaranteed by an arrangement with the Federal Insurance Administration. This allows most homeowners to find reasonable premiums.

How much is flood insurance in New Jersey?

The exact cost of your flood insurance will vary based on your location and the corresponding level of risk. Below is a closer look at the average cost of flood insurance based on your risk.

What does flood insurance cover?

If you purchase flood insurance, it’s important to read the fine print of the policy to determine exactly what your policy covers.

Most flood insurance policies are divided into dwelling coverage and contents coverage.

Here’s a closer look at each.

What isn’t covered by flood insurance?

Flood insurance doesn’t cover everything. While your policy may differ, most flood insurance policies don’t cover the following losses:

• Temporary housing costs

• Belongings outside of the dwelling, like patio furniture and fences

• Precious metals

• Currency

• Stock certificates

• Vehicles

• Personal property stored in the basement

• Financial losses due to paused business operations

How to buy flood insurance

If you want to protect your home from flood damage, it’s time to purchase a flood insurance policy. Property owners can generally choose from private flood insurance and government-provided flood insurance.

Government-provided flood insurance

Even though FEMA manages the NFIP, it doesn’t sell policies directly. Instead, NFIP flood insurance is provided through insurers that partner with the NFIP.

You can also use the flood insurance provider locator at Floodsmart.gov to find a participating insurer near you. Finally, you can contact your local independent insurance agent to get more information about NFIP options in your area.

Just remember that NFIP options are available only in communities that participate in the program and follow sound floodplain management strategies.

If you opt for an NFIP policy, expect a 30-day waiting period. Additionally, NFIP policies tend to cost more than policies offered by private insurers. You’ll also see coverage limits of up to $250,000 for the building and $100,000 for the contents.6

Private flood insurance

Many insurers offer flood insurance and have more flexibility to build a policy that works for your unique situation. If you don’t qualify for NFIP coverage or want higher coverage limits, private policies can be an excellent option.

The process to buy private flood insurance is similar to how you’d buy an NFIP policy, with one exception — while the cost of an NFIP policy is the same no matter which insurance company you use, insurers can charge different prices for private flood policies. So it’s important to shop around and get a flood insurance quote from multiple insurance companies to find the best rate for you.

Average cost of home insurance in New Jersey

New Jersey homeowners pay an annual average of $1,152 for a policy with $300,000 dwelling coverage, significantly less than national average of $2,532 with the same coverage, according to Insurify data.

It’s important to compare rates from multiple insurers so you can find affordable coverage that suits your needs. The table below shows the cheapest annual average rates from various insurance companies.

New Jersey flood insurance FAQs