Previously, flood insurance was only available through FEMA’s National Flood Insurance Program (NFIP). Now, though, homeowners have the option of purchasing a private flood insurance policy.
Both options have distinct advantages and disadvantages, and the right choice depends on your specific needs and risk factors. Here’s everything you need to know about the differences between private flood insurance and FEMA’s NFIP.
Looking for flood insurance in South Carolina? Contact KSA Insurance today for a personalized quote.
Who Needs Flood Insurance?
Whether or not you need flood insurance depends primarily on the location of your home. When purchasing a home, you can ask your realtor whether or not your home is in a high-risk flood zone. Alternatively, you can check FEMA’s flood zone map to find out more.
If you do live in a high-risk flood zone, flood insurance is strongly recommended, as it is the only way to protect your home and personal property from damage caused by flooding. Your mortgage lender may also require you to obtain flood insurance depending on your risk level.
Does Home Insurance Cover Flood Damage?
Homeowners insurance protects your home and personal assets from a variety of disasters ranging from fire to theft. However, most home insurance policies do not cover flooding. For those that live in flood-prone areas like Charleston, SC, this gap in coverage can be devastating. Flood insurance protects your home and property from water damage caused by floods, helping you to avoid significant financial loss in case of disaster.
Private Flood Insurance vs. FEMA NFIP
Homeowners can purchase either private flood insurance or flood insurance through the NFIP, which is funded and backed by the federal government. To help you make a more informed decision when shopping for policies, here are the primary differences between the two.
Private Flood Insurance
Private flood insurance is becoming a more popular option for homeowners looking for more customizable policies with higher coverage limits.
Sold by private insurance providers, private flood insurance covers the structure of your home and its contents in the event of a flood. Rather than being backed and funded by the government, damages are paid for by the insurer.
Aside from purchasing a standalone policy, private insurers may also offer excess flood insurance policies that cover damages that exceed your NFIP flood insurance coverage limit. Some insurers also offer flood endorsements which can be added to your homeowner’s insurance policy and typically have lower coverage limits.
Private flood insurance coverage limits can be as much as (or even exceed) $1 million.
The National Flood Insurance Program
Most flood insurance policies in the United States are underwritten by the NFIP; however, they are not sold directly through the program. Instead, you’ll need to contact your own insurer to purchase a policy through the program.
If where you live is not included in one of the NFIP’s participating communities, you can still get a flood insurance policy through the Write Your Own (WYO) Program, which allows private insurance companies to write NFIP flood insurance policies.
NFIP policies have two separate coverage limits for building structures and building contents. If you experience flood damage, an NFIP policy will cover up to $250,000 for damage to your home’s structure and up to $100,000 for damage to your home’s contents. Homeowners can purchase one or both of these coverages. Deductibles for NFIP policies can range from $1,000 to $10,000. Discounts are available for homeowners that choose higher deductibles.
Which Option Should You Choose?
Both private and NFIP flood insurance policies offer comprehensive coverage that protects homeowners against extreme water damage. When choosing between the two, there are a few important factors to consider: availability, coverage limits, and reliability.
NFIP flood insurance is available in all 50 states, plus U.S. territories. Meanwhile, private flood insurance availability varies depending on the insurance company and your location. Homeowners in particularly high-risk areas may have trouble finding a suitable private policy.
The main advantage of private insurance over an NFIP policy is the more flexible coverage limits offered by private insurers.
As mentioned, NFIP policies offer a maximum of $250,000 of coverage for building damage and $100,000 for your home’s contents. For many homeowners, this may be enough. However, those who live in more expensive properties may be better off shopping for private insurance policies that offer coverage limits that exceed those set by the NFIP. Moreover, private policies may offer additional benefits, such as living expenses reimbursement for homeowners displaced due to extreme flood damage.
Whereas private policies beat NFIP policies when it comes to coverage limits, NFIP flood insurance may be a more reliable option. Private flood insurance policies can be canceled at any time, for any reason, while NFIP policies cannot be canceled.
Private insurers that aren’t financially stable may also not be able to fully cover damages in the event of a major flood. As private flood insurance has only recently made its way into the marketplace, many insurers have yet to face any major disasters. On the other hand, NFIP policies are guaranteed to pay out damages caused by covered events.
KSA Insurance: Your Trusted Flood Insurance Provider
KSA Insurance is South Carolina’s trusted flood insurance provider. Through our experience and knowledge, we are able to help Charleston residents and those located throughout the southeastern United States find the comprehensive flood insurance policies they need to secure their homes and gain peace of mind.
Contact KSA Insurance today to get a quote and learn more about our various, comprehensive insurance products.