Everything You Need to Know About Flood Insurance in New Jersey
New Jersey homeowners with federally-backed mortgages may be required to carry flood insurance. Learn how flood insurance works here.
Written by Bonnie Stinson
Reviewed by Melanie Reiff
If you live in a high-risk flood zone as designated by FEMA, your mortgage lender can require you to carry flood insurance in
New Jersey
. Your regular homeowners policy probably does not offer coverage
for floods. Did you know that only 10.25% of NJ households have flood insurance compared to 27% of Americans? Even worse, flooding is way more likely in New Jersey than in many other parts of the country.
Weather patterns are becoming more intense, as the past decade in Jersey has proven. It’s extremely important to understand what flood insurance covers and determine whether you need it—before it’s too late. Here’s a quick guide from home and
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What is flood insurance?
Flood insurance will reimburse you for covered losses if you suffer water damage due to flooding. It is a type of property insurance, but it is generally not included in your normal coverage.
Check your policy to find out. You may see that you have coverage for water damage due to plumbing failures and windstorms—but not flooding. This means that your house and your belongings have no coverage if they are damaged in a flood. That’s why it’s so important to purchase a separate flood policy.
What does flood insurance cover?
A flood insurance policy may cover one or both of the following: the building and its contents.
If your building is covered, your physical structure has protection down to the studs (carpeting, walls, etc). On the other hand, contents coverage covers your possessions like furniture, clothing, and electronics.
Together, your flood insurance policy may provide financial protection for the electrical system, heating and cooling systems, appliances, furniture, electronics, and more.
Note that flood insurance will not cover every object in your home, nor will it cover every type of flooding. For instance, you probably won’t have coverage if a sewer backup results from widespread flooding across more than one acre. Similarly, cash, cars, and property stored in the basement will probably not be covered.
So what is covered? Here’s a more detailed breakdown of what’s covered (and what isn’t) under each type of insurance:
Type of coverage | What it covers | What it doesn’t cover |
|---|---|---|
Building | Electrical and plumbing systems
Water heaters and furnaces
Large appliances like dishwashers or refrigerators
Permanently installed bookcases, cabinets, and paneling
Permanently installed carpets
Window blinds
Foundational walls, staircases, and anchorages
Detached garages
Fuel tanks, solar panels, and well water tanks/pumps | Decks and patios
Swimming pools
Fences and landscaping |
Contents | Clothing
Furniture
Electronic equipment
Curtains
Washing machine and dryer
Portable air conditioners, including window units
Carpets not included in building coverage
Valuables such as artwork up to $2,500 | Valuable papers
Currency
Anything stored in a basement |
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Do you need flood insurance in New Jersey?
In short, probably. The long answer is that it depends on your specific neighborhood and your risk profile.
There is no statewide requirement that says New Jersey homeowners must carry flood insurance. However, a federal mortgage lender can require a borrower to carry flood insurance if the home is in a high-risk flood zone.
Even if you are not required to carry it by your lender, flood insurance is a wise idea if you live near the Jersey Shore or on a floodplain.
Not sure? Start by finding out the likelihood of a flood in your area by entering your information into a
FEMA map
. FEMA (Federal Emergency Management Agency) researches and publishes flood risk information online. Your policy may come through the
National Flood Insurance Program (NFIP)
which sells flood insurance to homeowners based on the risk level determined by FEMA. To buy an NFIP policy, you must live in one of NJ’s participating communities (find the list here
).However, anyone can buy flood insurance from a private company—and it’s a good idea if you’re in an area that experiences frequent flooding like Ocean City where 81% of all properties are at risk.
What flood zones require flood insurance in New Jersey?
Flood zones are
coded
with a letter grade that begins with either A, V, X, B, and C. Then, there are various sub-groups such as AO and AE. In New Jersey, homeowners with a property located in a zone beginning with A or V must carry flood insurance.
It’s important to note that A and V zones are not the only areas that experience flooding. In fact, more than 20% of NFIP claims are made by policyholders in an X, B, or C zone. Rather, your flood risk is lower in these areas so you’re not compelled to carry flood insurance.
Flood Factor®
is a good resource to help you determine your home’s level of risk. Key Takeaway If you live in a designated high-risk flood zone (starting with A or V) and have a federally-backed mortgage, you must purchase flood insurance.
How much does flood insurance cost in New Jersey?
The national average cost of flood insurance is $739 per year. Unfortunately, New Jersey’s average flood insurance premium is considerably higher at $949 per year or $79 per month.
However, there is a new pricing methodology coming in April 2022 thanks to the NFIP. Due to more accurate calculations, the majority of New Jersey homeowners can expect their monthly premiums to decrease.
Your specific policy cost depends on far more than just your state, of course. The age, size, and type of the insured property can either raise or diminish your monthly premium. Note that the coverage limits for residential customers are $250,000 for building coverage and $100,000 for contents coverage. Your provider may also set a deductible limit on your policy.
How to save money on flood and auto insurance in New Jersey
Here are some budget-savvy ways to reduce the cost of flood insurance in New Jersey:
- Follow FEMA’srecommended flood risk mitigation practices
- Choose a higher deductible
- Choose contents-only coverage
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