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Homeowners and renters may get flood insurance from the federal government or private companies. The only way to insure your home against flood damage is by purchasing a separate policy since your homeowners or renters insurance will not be enough. If you have a mortgage and live in an area where flood risk is high, your lender may require you to purchase a flood policy that is specifically backed by the National Flood Insurance Program (NFIP).
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Getting Flood Insurance: What to Know
You can purchase flood insurance through an agent or an insurer participating in the National Flood Insurance Program. There are no restrictions on who can purchase a policy. You don't need to live in a floodplain or high-risk area to purchase a flood policy. However, due to the high cost of this type of insurance, it's usually only an option you should consider if you live in an area that will be affected by flooding.
Type of Flood Insurance
How to Buy it
|National Flood Insurance Program||Shop through an insurer or agent. Call (888) 379-9531 to find one||Usually capped at $250,000|
|Private Flood Insurance||Search online for companies in your local area. Example: Flood Insurance Agency, TypTap (only Florida), Golden Bear (only California)||Vary. Can exceed $250,000|
Buying Government Flood Insurance: The National Flood Insurance Program
You can purchase flood insurance from the National Flood Insurance Program, but only through an agent or insurer. There is no option to buy the insurance directly from the government. You can either search for insurers online or contact the NFIP Referral Call Center at (888) 379-9531. When you call simply request an agent referral. The premiums will be the same, no matter what insurer or agent you go through. Rates are set by the NFIP and they depend on predetermined factors such as the value of your property, the year it was built, and flood risk.
While you won't see variation in rates for the same property, you should still shop around between different insurance companies. When you go to file a damage claim, it will be handled by the insurers, not the government. Therefore, if a company is known for being difficult to work with during the claims process on their other lines of insurance, you can bet they will be just as difficult when you try to file flood damages.
When you sign up for flood insurance through NFIP, your coverage won't kick in until 30 days after you sign up. Therefore, you shouldn't wait untill the last minute to buy a policy.
- Available to everyone.
- Reliable coverage.
- Claim limits usually under $250,000.
- Don't cover additional living expenses should you be displaced in a flood.
Buying Private Flood Insurance
Some private insurers have recently begun selling flood insurance that is separate from the NFIP. This option isn't available in all states. Flood insurance premiums purchased through a private insurer may be more or less expensive than NFIP — it depends on how much you want to insure your home for. The reason you may want to buy flood insurance through a private insurer is because claim limits can be higher. This is something you should consider if the combined value of your personal possessions is above $100,000 and the value of your home is over $250,000. Standard NFIP-backed policies will typically not pay out claims beyond those amounts.
There are a few risks associated with buying flood insurance from a private company. These insurers can drop your coverage mid-term or not renew it for another year. This poses a risk because it may leave you scrambling last-minute for another flood insurer. When you're dropped, your only option will likely be an NFIP flood insurance policy, which will require you to wait 30 days before it kicks in. Furthermore, NFIP rates may be higher for those who were previously using a private insurer.
- Higher claims limits available.
- Shorter waiting period (14 days vs 30 days).
- May suddenly drop you or not renew your policy.
- Not available to all.
How to Get Cheap Flood Insurance
NFIP-backed flood insurance will usually be the cheapest option for homes in high-risk flood areas. The average price of flood insurance purchased through NFIP is $672. Where available, private flood insurers may be cheaper, especially in low flood-risk zones. For a model home in a "B" flood zone, The Flood Insurance Agency quoted us an annual premium of $402 with a $1,250 deductible. In a "V" flood zone, that same policy would cost $13,732 per year.
You can also sometimes get a discount on NFIP-backed flood insurance policies. There are two ways to do this.
You may also receive a discount if your community meets the qualifications of the Community Rating System organized by NFIP. Your local city officials may take steps to improve your community's preparedness in the event a flood happens. The NFIP will then rate your area on a scale of 1 to 10, with a lower rank corresponding to a higher discount. The discounts range from 5% to 45%. Only a single city in the United States — Roseville, California — has managed to qualify for the highest discount.
These discounts are automatically applied to your premium based on your location.
Flood Insurance Discount