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Your New Flood Insurance Options

Most homeowners with flood insurance still get it from the federal government. But private insurers are starting to offer policies with higher coverage – and sometimes even lower premiums.

Question:

Now that it’s hurricane season, I’ve been thinking about buying flood insurance. I hear that there’s a 30-day waiting period to get coverage from the National Flood Insurance Program. Are there any alternatives?

Answer: The National Flood Insurance Program (NFIP) was once the only game in town for homeowners seeking to insure their houses against heavy rains and overflowing rivers. But a growing number of private insurers now offer flood policies that usually have a shorter waiting period, higher coverage limits and may even cost less than the federal program.

The NFIP provides up to $250,000 of dwelling coverage and up to $100,000 of contents coverage. Policies in low-risk areas can cost as little as $456 per year; if, however, you live in a higher-risk area, coverage could cost you thousands of dollars (see FloodSmart.gov for more information about NFIP policies).

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With private flood insurance policies, you can usually get higher dwelling and contents limits--often as high as those on your homeowners insurance policy. The waiting period for coverage to kick in is often less than 30 days; many private policies have a waiting period of 10 days or less--although insurers may place a moratorium on issuing new policies if a storm is on its way, says John Austin Tatum, an insurance agent in Abilene, Texas, who has been selling private flood insurance since 2014. In some areas, premiums can be a lot less expensive than NFIP coverage. Tatum cut his own flood insurance premiums from $1,500 to $500 when he switched from an NFIP to a private flood policy.

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Compare the cost of several private flood insurance policies with NFIP coverage. “They all have different pricing points and sweet spots,” says Tatum. Your homeowners insurance agent may sell flood coverage, or you can find an agent who sells NFIP coverage through FloodSmart.gov. To locate an independent agent who works with many insurers, go to Trusted Choice.

Some states have more private flood insurance options than others. According to a study by S&P Global Market Intelligence, private flood insurers now account for 17% of all flood insurance premiums nationwide, with the biggest markets in Florida, California, Texas and New York. You may also find out more about the companies that sell private flood coverage in your area through your state’s insurance department website, such as the list of private flood insurers from the Florida Office of Insurance Regulation.

For more information about NFIP and private flood coverage, see Getting Affordable Flood Insurance. Learn about protecting your home and finances from disasters at How to Disaster-Proof Your Home. For advice on financially recovering from a natural disaster, check out Rebuilding Your Home and Finances After Disaster Strikes.

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