Did you know that over the past twenty years 99% of counties in the United States have been affected by a flooding event? Gone are the days when only people living by the coast had to worry about flooding.

These days, almost everyone needs it in some form or another. But exactly what form do they require? What are the different types of flood insurance? If you want to learn the answer to these questions, then you’re in the right place.

In this article, we’ll teach you everything you need to know about these two main types of flood insurance. Let’s get started!

The Two Main Types of Flood Insurance

Many people think that their home insurance policy will cover flood damage. While it’s true that some home insurance providers will cover water damage, this doesn’t extend to natural floods.

Because of this, many mortgage lenders will require you to get a separate insurance policy specifically for floods. This is especially true if you live in an area that’s prone to floods during certain seasons.

So, what are your options? The first, and most popular, is the National Flood Insurance Program (or NFIP) that’s backed by the Federal Emergency Management Agency (or FEMA).

The other type of flood insurance is private. This type of insurance is backed by private insurance providers. Currently, private flood insurance takes up only a fraction of the market.

But, that’s increasingly changing. But, before we dive into the pros and cons of these two types of insurance, let’s learn a little more about each of them.

What Is the National Flood Insurance Program (NFIP)?

The NFIP was first started in the 1960s by the federal government. It currently covers around 90% of the market for flood insurance. These policies are usually sold through their Write Your Own (WYO) program.

This is a program that allows private insurance companies to use government coverage while still retaining their name and branding.

With this type of flood insurance, you get a $250,000 coverage limit on your home and a $100,000 coverage limit on your belongings. For many people, this is not enough to cover their expensive homes.

What Is Private Flood Insurance?

As we mentioned, private flood insurance only makes up a small percentage of the market. But, that is quickly changing. Why? Because in the past, the insurance industry viewed flooding as an unacceptable risk.

But, that’s changing thanks to evolving models that are getting better at predicting the risk of flood. That way, you can pay accordingly. If you live in a low-risk area for floods, then you don’t pay as much on your premiums.

If you live in a high-risk flooded area, then you pay more for the eventual damage that will happen to your property.

Which Is Better: Private or NFIP?

First, let’s cover the areas where private flood insurance beats out the NFIP. The first area is the maximum coverage you can get on a flood policy. With the NFIP the maximum rebuild limit is $250,000.

With private insurance, on the other hand, that number increases to $500,000 or more for most policies. So, you get a lot more money to rebuild your home. There’s also a much shorter waiting period for private flood insurance.

With the NFIP you will need to wait thirty days to hear back from them. With private insurance, you will usually hear back in as little as two weeks. What’s more, you will often save money on your private insurance policy as well.

However, there are some circumstances when the NFIP is stronger. For one thing, you typically end up paying more out-of-pocket for deductible claims with private insurance.

What’s more, the availability of private insurance might be limited in high-risk areas. If your house is found in a high-risk zone, then your policy could be canceled or non-renewed by your provider.

When Should You Consider Private Flood Insurance?

You should consider private flood insurance if you believe you’re paying too much for your NFIP coverage. This happens a lot with NFIP plans.

Some people are grossly undercharged for the insurance, while others are grossly overcharged. You should also go with private if you want higher coverage limits on your home or belongings.

We also recommend private insurance for the following circumstances:

  • You’re covering a commercial business
  • You’re not located in a special flood hazard zone
  • You’ve never had flood insurance on a property

How Do You Find the Best Private Flood Insurance Provider?

Sadly, not all private flood insurance providers are created equally. Some might offer you an attractive, affordable rate when you first sign up. But, when the flood itself rolls around, coverage is sparse, or even nonexistent in some areas.

So, how do you make sure that you’re going with a dependable private insurer? We recommend that you find a flood insurance provider like Better Flood. These types of insurers only specialize in flood cases.

That’s important because many general agents only deal with auto and homeowners insurance. So, when a flood policy rolls around, they lack the knowledge to save you money.

That isn’t true with providers that live and breathe flood insurance. Finally, you should also check the customer reviews. What are other customers saying? If the general experience was a positive one, it’s probably a good pick for a smart homeowner.

Want More Content? Keep Reading

We hope this article helped you learn more about the different types of flood insurance available today. Ultimately, the right flood insurance for you depends on your specific circumstances.

While the NFIP works for a lot of people, it’s not right for everyone. So, if you think you can save money, or get better coverage, then look into private flood insurance today.

Do you not want this article to end? We don’t blame you. Luckily, there are hundreds more that you can check out by continuing to explore our site. So, get started!

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By SARAH