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Flooding is a serious problem in the United States. It is the costliest catastrophe insurance claim in the country, causing billions in economic losses every year. You don’t want to be a victim? Kindly keep watching.
In this article, you will learn the basics of flood insurance, legal requirements, how to request and compare quotes, simple steps to file a claim, and tips to save on your flood insurance policy.
What is Flood insurance?
Flood insurance denotes the specific insurance coverage against property loss from flooding. To determine risk factors for specific properties, insurers will often refer to topographical maps that denote lowlands, floodplains and floodways that are susceptible to flooding.
In the United States, only 20% of American homes at risk for floods are covered by this type of property coverage. Most private flood insurance companies do not insure against the peril of flood due to the prevalence of adverse selection, which is the purchase of insurance by people most affected by the specific peril of flood.
Flood Insurance Cost
In the United States, the average flood insurance costs about $700 per year or $58 a month, through the National Flood Insurance Program (NFIP). But this vary wildly, depending on the home’s elevation, location, and other criteria.
Purchasing a flood insurance policy is well worth it. This is even more if you live in a flood-prone area or you fully own your home without a mortgage. Traditionally, you’d get your flood insurance through the National Flood Insurance Program, which is run by FEMA. But there are other Flood Insurance Companies that you can buy the policy from.
Flood Insurance Companies
Very few insurers in the US provide private market flood insurance coverage due to the hazard of flood typically being confined to a few areas. As a result, in 1968, the federal government created the National Flood Insurance Program to reduce the impact of flooding on private and public structures.
As of August 2017, the program insured about 5 million homes (down from about 5.5 million homes in April 2010), the majority of which are in Texas and Florida. The cost of the insurance program was fully covered by its premiums until the end of 2004, but has had to steadily borrow funds since (primarily due to Hurricane Katrina and Hurricane Sandy), accumulating $25 billion of debt by August 2017. In October 2017, Congress cancelled $16 billion of NFIP debt, making it possible for the program to pay claims. The NFIP owes $20.525 billion to the U.S. as of December 2019.
Here are 10 best private flood insurance companies in the United states:
- FM Global
Direct Written Premiums: $299,749
Market Share: 42.7% - Assurant
Direct Written Premiums: $83,042
Market Share: 11.8% - Zurich Insurance Group
Direct Written Premiums: $77,128
Market Share: 11.0% - American International Group (AIG)
Direct Written Premiums: $59,759
Market Share: 8.5% - Swiss Re
Direct Written Premiums: $49,688
Market Share: 7.1% - Berkshire Hathaway
Direct Written Premiums: $19,837
Market Share: 2.8% - Liberty Mutual
Direct Written Premiums: $19,329
Market Share: 2.8% - Alleghany Corp.
Direct Written Premiums: $17,571
Market Share: 2.5% - Allianz Group
Direct Written Premiums: $15,924
Market Share: 2.3% - MAPFRE
Direct Written Premiums: $14,603
Market Share: 2.1% b.
Federal Flood Insurance Program Coverage
The federal flood insurance policy covers the cost to rebuild or the actual value of the property, or whichever is less. Generally, that includes:
- Window blinds
- Debris removal
- Water heater
- The home and its foundation
- Electrical and plumbing systems
- Detached garages, usually limited to 10% of your home policy
- Permanently installed carpeting over an unfinished floor
- HVAC equipment like furnaces, air conditioning, and water heaters
- Kitchen appliances: refrigerator, stove, and built-ins such as dishwasher
- Permanently installed wallboard, paneling, bookcases, and cabinets.
A flood Insurance policy that covers your personal property provides coverage for:
- Curtains
- Washer/dryers
- Window AC units
- Your freezer and frozen food
- Portable microwaves and dishwashers
- Carpets not covered by your building policy
- Clothing, furniture, and electronic equipment
- Up to $2,500 in valuables, such as art and furs.
Stuffs Federal Flood Insurance Does Not Cover
Typically, the federal flood insurance program does not cover:
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Flood Insurance Requirements
Flood insurance requirements are flexible. Most mortgage companies require their lendees to buy flood insurance if their home is in a high-risk area. In certain flood-prone areas, the federal government requires flood insurance to secure mortgage loans backed by federal agencies such as the FHA and VA. However, the program has never worked as insurance, because of adverse selection.
The lack of flood insurance can be detrimental to many house owners who may discover only after the damage has been done that their standard insurance policies do not cover flooding.
It’s a common misconception that people don’t need the coverage if they live in a moderate to low-risk area. The fact It can flood anywhere it rains.
Flood Insurance Quotes
You cannot buy the insurance directly from the National Flood Insurance Program (NFIP), but you can call your Ins agent or get free Flood Insurance Quotes Online from private insurers. If your insurance company does not cover flooding, you can contact the NFIP Referral Call Center at 1-800-427-4661 to request an agent referral.
File Flood Insurance Claim
Whether your home experienced inches of flood water or a few feet, flooding can create very costly damages. The National Flood Insurance Program (NFIP) can help you recover If you’re an NFIP policyholder
You can easily file your flood claim. Filing a flood insurance claim is easy, and you can do it in 3 simple steps:
Step 1: Notify Your Supplier
Right you have experienced a flooding, contact your flood insurance company to start the claim. Need help finding your insurance agent or carrier? Call the NFIP at 877-336-2627. Ensure that you have the following information ready to provide to the agent:
- Insurance company name
- Insurance policy number
- The case number (if you have one)
- Tel and/or email address to be reached.
Step 2: Document the Damage
Within days of filling the claim an adjuster should contact you requesting evidence of the damage to your home and possessions in order to estimate the repair. Remember to separate damaged from undamaged properties if possible.
- Take pictures of all of the damaged items or properties: structural damage, discarded objects, standing floodwater levels, and others.
- Create a list of damaged or lost items, along with their value. If possible, include their date of purchase and/or and receipts.
- If necessary, place flooded items outside of the home.
Step 3: Prepare Your Proofs
An agent or adjuster will guide you in preparing a Proof of Loss for your official claim. A Proof of Loss can be many things, but must contain the specific details set forth in the Standard Flood Insurance Policy. You’ll need to file it with your insurance company within 60 days of the flood. This document substantiates the insurance claim and is required before the National Flood Insurance Program (NFIP) or insurance company can make payment.
You’ll receive your claim payment after you and the insurer agree on the amount of damages and the insurer has your complete, accurate, and signed Proof of Loss. If major catastrophic flooding occurs, it may take longer to process claims and make payments because of the sheer number of claims submitted.
7 Tips to Save On Your Flood Insurance Premium
Here are 7 simple tips that can help you save on your flood insurance premium:
- Figure out how likely your property could get flooded
Check your local flood maps. You can do so for free by entering your address in the search box at FEMA’s Flood Map Service Center (https://msc.fema.gov/portal) to find out if your property is located in a National Flood Insurance Program, (“NFIP”) participating area.
- Find Flood Insurance Companies
Need help finding an insurance provider? Visit out list of top 10 best insurers in the country. In addition, The National Flood Insurance Program (NFIP) partners with more than 60 private insurance companies to sell and service flood insurance policies. If you don’t have an insurance company or if your insurance agent does not sell flood insurance, use the NFIP insurance provider locator to find a provider near you.
- Compare Your Flood Insurance Quotes
A simple way to compare is to get a quote for a National Flood Insurance and a private flood insurance policy and compare the coverage and pricing of each side by side. Buy the better option if you can afford it.
- Call Reliable Flood Insurance Agents or Brokers
Even if you are in a low risk area, don’t assume your property is not at risk for flood. You can check the FEMA Map or call agents/brokers to determine the many options you have available and compare.
- Buy Enough Coverage
Now that you decide to buy your flood insurance policy, you need to make sure you are buying enough coverage for repairing/rebuilding and proper clean-up. Flood policies generally have fixed dollar amounts for dwelling and contents coverage.
- Confirm with Your Agent
Confirm in writing with your agent that you have “replacement cost” coverage and “code upgrade” coverage. This is especially if the insured structure is older than five years.
- Have Your Community Participate In the NFIP
To purchase NFIP flood insurance and receive discounted flood insurance rates, you must live in a participating community. Currently, more than 24,000 communities participate in the NFIP. You can find out if your community participates in the NFIP, visit The National Flood Insurance Program Community Status Book, and then click on your state.
If you have a suggestion, comment or question regarding flood insurance, kindly comment below.
