Flood Insurance in New Jersey

Flood Insurance in New Jersey

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Flood insurance is not mandatory for homeowners in New Jersey, but it may be a requirement in order to qualify for a mortgage if you live in an area that is at high risk of flooding. Even if you're not near the coast or a major river like the Delaware, flood insurance may be worth purchasing, as homeowners and renters insurance don’t cover damage due to floods.

Costs due to flooding are rarely reimbursed by the government, so you should consider whether you can afford the cost of repairing your home after a flood.

How much does flood insurance cost in New Jersey?

The average cost of flood insurance in New Jersey is $974 per year, though prices may vary significantly based on location.

Flood insurance rates backed by the NFIP in New Jersey are based on a set formula, so the same policy would cost the same amount regardless of which insurance company you purchase it from. The formula is based on a number of factors that impact how susceptible to flood damage your house is, like distance to the coast, elevation and building materials.

If you live in a high-risk flood area, your home's particular susceptibility to flooding is determined by the height of your home's lowest floor (including the basement) compared to how high the water is expected to rise in a 100-year flood, which is called the base flood elevation (BFE).

For example, if a 100-year flood in your area is expected to reach 10 feet above sea level, and the floor of your basement is 11 feet above sea level, your house is one foot above BFE. The lower your lowest floor, the more expensive your flood insurance rates will be.
How the elevation of your home affects your flood insurance rates

Other factors that influence your flood insurance rates include:

  • Coverage amount: Maximum coverage from NFIP is $250,000 for your home's structure and $100,000 for your personal property.
  • Deductible amount: Lower deductibles mean higher flood insurance premiums, and vice versa.
  • Age of your home: Homes built before FEMA's FIRM flood maps were introduced in their areas are generally less expensive to insure.
  • Residential or business property: Businesses are more expensive to insure than residential properties.
  • Whether the property is your primary residence: Secondary residences are much more expensive to insure.

We collected average flood insurance rates for several cities in New Jersey to give an idea of what residents of different areas spend each year on flood insurance. However, even in a given area, rates may vary significantly based on the criteria described above. Among the cities we surveyed, Newark had the highest average annual premium, $2,684, while Tuckerton had the lowest, $725. Newark also had the highest average coverage amount, with a typical property insured for approximately $487,000.

Number of policies in effect
Coverage in force
Total premiums
Average cost per policy
Atlantic City7,203$1,457,856,900$7,029,464$976
Jersey City7,028$1,773,364,300$5,359,440$763
Little Ferry929$206,218,500$1,759,601$1,894
Toms River8,963$2,213,265,300$7,857,727$877

Flood insurance policies backed by the NFIP are available from most insurance companies in New Jersey, but you'll find the same rates across all companies, so there's no need to shop around among those providers.

On the other hand, it's worth looking at a few private flood insurance providers, as it's possible you'll find a better rate or coverage that fits your needs better. For example, if you own a home near the boardwalk on the Jersey Shore, you may not be able to find flood insurance that covers your finished basement.

Am I required to purchase flood insurance in New Jersey?

While flood insurance is not a legal requirement of homeownership in New Jersey or any other state, lenders must mandate flood insurance coverage as a condition of issuing federally backed (FHA) mortgages to properties located in Special Flood Hazard Areas, or SFHAs.

If you live in one of these areas and have an FHA mortgage, you'll be required to purchase flood insurance. A Special Hazard Flood Area, also called an AE flood zone, has a 1% chance or greater of flooding each year. These areas are also sometimes referred to as 100-year floodplains.

While a 1% chance may not seem significant, it means that homeowners who live in an SFHA have a nearly one in three chance of experiencing a flood over the course of a standard 30-year mortgage. And while homeowners insurance in New Jersey may protect you from many unwanted expenses, flood damage is not one of them.

Additionally, some mortgage lenders may require you to purchase flood insurance if you live in an area that is at moderate risk of flooding, such as a 500-year floodplain or near the Jersey Shore. But regardless of whether you are required to purchase flood insurance, you should weigh the decision of whether to carry flood insurance carefully. A single inch of water in a home due to flooding can cost $10,000 or more to repair. And nearly a quarter of floods occur outside flood zones.

Most flood insurance sold in the U.S. is backed by the National Flood Insurance Program (NFIP) and sold through mainstream insurers. Some private companies also offer their own policies that aren't subject to NFIP regulations.

Do I live in a flood hazard area?

While most flood zones exist near oceans, rivers or other major bodies of water, areas that are or are not susceptible to flooding are separated by distances of feet, not miles. Furthermore, whether you're in an SFHA is not a simple matter of distance from a body of water. Your home's elevation and the existence of flood control measures, such as levees, make a much bigger impact on your risk.

To see if you live in an area at risk of flooding, use the FEMA flood map search tool. If you live in a high-risk flood zone, you'll need a valid elevation certificate of your home to purchase flood insurance.

What does flood insurance in New Jersey cover?

Flood insurance policies backed by the NFIP cover the structure of your home and its contents up to separate limits. You can choose the level of coverage you need to protect your home up to the set limits of $250,000 for the structure of your home and $100,000 for your personal property.

The structure of your home includes:

  • Exterior walls
  • Roof
  • Electrical and plumbing systems
  • Heating and cooling systems, unless they are portable
  • Detached garage
  • Appliances, unless they are portable

Personal property includes:

  • Clothing
  • Books
  • Electronics
  • Furniture
  • Portable heating and cooling systems, like window air conditioners
  • Portable appliances, like microwaves

However, NFIP-backed flood insurance has a number of coverage limitations, both in terms of the type of item covered and what the cause of the damage is.

Things not covered by NFIP flood insurance include:

  • Any damage not directly caused by flooding, or which could have been prevented, such as mold.
  • Damage caused by earth movement, even if it's a result of flooding.
  • Damage to the land you live on, such as from erosion.
  • Damage to cars, currency or anything that is outside, like swimming pools or fences.
  • Finished basements and any personal property kept in the basement.

Keep these restrictions in mind when you're shopping for flood insurance. If any of these apply to you, consider purchasing flood insurance from a private company, which may provide coverage without those limitations.

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