The National Flood Insurance Program (NFIP) was introduced as a way to make flood insurance more affordable for homeowners living within high-risk flood zones. However, continued regulatory changes, lapses in programs and a big increase in devastating flood events across the country have stirred up interest in alternative options – like private flood insurance.
Just like NFIP coverage, private flood insurance covers flood losses from water damage to the structure of a home and the belongings inside of it. One thing that differentiates the two is that unlike NFIP coverage, private flood insurance is not financed through taxpayer money, but rather through reinsurer funds and insurance premiums. There a quite a few advantages to having private flood insurance over the federally-backed NFIP.
One of the biggest advantages of private flood insurance for homeowners’ is the ability to secure coverage with higher limits. NFIP coverage is limited to $250,000 for the structure damage up to $100,000 for personal belongings, which is largely based on flood loss potential estimates from FEMA. High-value homeowners typically need a larger amount of coverage than the NFIP can provide, and they can get that through some private flood insurers. Private flood coverage can be purchased through providers such as Lloyd’s of London on a primary or excess basis and can also include deductible buybacks.
Another advantage that private flood insurance has over the federal program is the ability to be tailored to fit the property. NFIP coverage is designed to provide the most basic protection and has a number of exclusions such as; damage to basement property, pools, detached structures, landscaping, decks or outdoor furniture. It also does not cover expenses incurred during temporary relocation. With a private flood insurance policy, clients have the option of adding additional coverage options that may be of value to them.
Faster and Easier
The process of obtaining private flood insurance can be much faster and easier than the NFIP process, which has a 30 day waiting period for coverage. From the ability to obtain a quote without having to provide certain documents or photos to the speed in which agents can deliver coverage, clients are often happy to be able to streamline it all with a private insurer. The claims process is often easier with private adjusters as well.
In some cases, private flood insurance plans can be more affordable than a comparable NFIP plan. A study done by the independent firm Milliman found that even in the most hazardous of flood zones, between 62 and 88 percent of homes could find lower premiums through the private market.
About Wilmington Insurance Agency
Wilmington Insurance Agency delivers comprehensive coastal property solutions. We are a Managing General Agency and provide independent insurance agents with property and liability insurance solutions for residents and businesses primarily in Maryland and Virginia. We work alongside our sister company, Wilmington Insurance Company, established in 1996 and providing Property & Casualty commercial lines business, homeowners, and condominium insurance in the state of Delaware. To learn more about how we can help you to expand your book of business in the coastal market, contact us at (302) 231-2800.