If you live on the coast and finance your home, you are probably required to have flood insurance. With rising sea levels though, even homeowners in moderately risky flood zones should consider getting flood insurance. Finding the right policy is not always so straightforward, however. In this piece we detail how you can get the best flood insurance policy for yourself.
Who Has the Best Flood Insurance?
The majority of flood insurance policies are the same, so the best flood insurance comes down to customer service and coverage limits:
Best Flood Insurance Company Based on Customer Service
We recommend Amica, USAA, and Encompass as three top flood insurers based on the high ratings they received from customers in the 2016 J.D. Power study of homeowners insurance companies. This is especially important because of the nature of flood insurance claims. Most claims are filed after major large-scale floods, and the NFIP only has a finite amount of adjusters. Having an insurer with a strong record for keeping their clients happy and informed can go a long way in reducing the stress of dealing with a flood. Amica, USAA and Encompass score in the top three for their handling of clients and their home claims, which we expect to be the same for their flood claims.
USAA is only available to those who qualify - military members and their direct family. The company is generally rated well across most of their insurance products. Amica and Encompass are open to anyone, but they do not operate in every state. If they are not available, Liberty Mutual is a third best option from the top companies you will likely be able to find in your area.
Best Flood Insurance for Coverage
If you want higher limits than what is available in the standard NFIP-backed policies, private insurance companies are better options for the best flood insurance coverage. NFIP claims are usually capped at $250,000, with only homes in the highest risk categories getting access to higher limits. They also don't cover additional living expenses should you be displaced in a flood. If you live in a lower risk area and want higher limits you will need to go through a private flood insurance company--although there are not many around.
Currently your best bet for private flood insurance is the Flood Insurance Agency. The Flood Insurance Agency is backed by Lloyd's of London, among others, and offers policies in 34 states currently. If you live in California and Florida, you have a few more options to compare with:
Here is a quick summary of the pros and cons to going with a private insurer:
|Benefits of Private Flood Insurance||Considerations of Private Flood Insurance|
|Coverage limits past $250,000 for home and $100,000 for possessions||Risk of being dropped|
|Shorter waiting period (14 days vs 30 days)||Higher premium if you go back to NFIP|
|Less worry of insolvency or instability||Lender may require you use NFIP|
Another thing to be aware of with a private flood insurer is that it may not have a strong financial backing, so it is possible you may be dropped if your risk becomes too great to them. Furthermore, if you try to get coverage with the NFIP again, you may find your premiums are much higher. You would no longer be "grandfathered" into whatever zone your home was initially placed in. What that means is if your home is now in a more dangerous zone, you would have to pay that zone's current rates rather than your initial rate. Finally, be aware that your financer, especially a federal financer, may not allow you to take a policy out with a private company.
How Do You Buy Flood Insurance?
You can buy flood insurance by speaking with and getting a quote from a flood insurance agent who can write policies from the NFIP. You won't be able to buy flood insurance online as you would car or homeowners insurance. For private flood insurance, the Flood Insurance Agency provides estimated quotes on their website, but you will have to submit a separate application to actually purchase a policy.
There are currently 79 insurers in partnership with the NFIP. State Farm customers should know that the company recently pulled out of its partnership with NFIP however. If you have a policy with State Farm for another type of insurance, and would rather not go to another company for flood insurance, you may go directly to the NFIP.
Do You Need Flood Insurance?
You should get flood insurance if your home is located in a moderate to high risk area for flooding. To be more specific, you should have flood insurance if you live in a "V" or "A" zone (Special Flood Hazard Areas (SFHA)) which are considered "very high risk" for flooding by FEMA. To find out if you live in a high risk zone, you can search your area's flood map here. To know whether you should get flood insurance you can consult the table below:
|Zone||Should You Get Flood Insurance?|
Scientific consensus is that sea levels are rising, and lands that were not susceptible to flood a decade ago can be susceptible now, and even more so another decade from now. Remember also that your standard homeowners insurance policy will not cover any damage caused by a natural flood. If you think there can be any chance your home may be flooded in the next decade, consider that just one inch of flood water can cause $10,000 of damage to a home, the average flood insurance claim is $30,000, and 20% of all claims come from "moderate to low risk" zones. To get more information on what you're covered for with flood insurance, click here.
How Much Does Flood Insurance Cost?
Flood insurance can cost as little as $400 per year for low-risk homes to over $13,000 per year for high-risk homes. It all depends how elevated your home is and how far from the coast. To get a rough idea on what some plans may cost, we got some quotes from the Flood Insurance Agency's website for different types of home facing varying risk for $250,000 of building coverage and $100,000 of contents coverage with a $2,000 deductible.
|State||"V" Zone||"A" Zone||"B" Zone and Lower|
*for a $1,250 deductible
If you are in a "V" zone, it's clear you are going to need to pay a sizeable amount of money each year for your flood insurance. We would recommend comparing as many quotes as you can. The NFIP may be able to get you discounts not available through a private insurer, so they may end up being cheaper. You can also adjust your deductible for a higher amount to reduce your premium; we found opting for a $5,000 deductible saved you around $1,000 per year in a "V" zone. Your premium will also fluctuate depending on your home. The following are some important factors that are considered:
- Age of the home
- What your home is made of
- If there is a basement
- Number of Floors
You can usually estimate your flood insurance premiums for the NFIP at floodsmart.gov, however the website is under maintenance as of publication.