Is Private Flood Insurance Right for You?

For decades, nearly all flood insurance in the U.S. has been provided through the federally backed National Flood Insurance Program — but these days you may have other options. A growing number of private flood insurance companies offer coverage that may be more affordable or comprehensive than what you’ll get through the NFIP.

Here’s what you need to know about private flood insurance, plus a few companies to consider.

But first, a note on terminology: NFIP policies are sold through companies such as Allstate and Farmers. When we refer to “private flood insurance,” we mean policies that aren’t underwritten by the federal government and don’t have the same restrictions.

Private flood insurance is a small but growing part of America’s flood insurance landscape. The NFIP’s total premiums added up to more than $3.5 billion in fiscal year 2021, according to Federal Emergency Management Agency data

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. In comparison, private flood insurers accounted for just $302 million in premiums in 2020, the most recent year for which data is available, according to the Insurance Information Institute

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But the NFIP’s massive market share doesn’t mean it’s the best option for everyone. For example, the program’s coverage limits top out at $250,000 for the structure of your home and $100,000 for your belongings. These amounts may not be enough if you have a large home or expensive belongings.

Compare those limits with the offerings of a private insurer like Neptune, which will cover your house up to $4 million and your belongings up to $500,000.

An NFIP policy won’t pay to repair a damaged swimming pool or replace items stored in your basement, nor will it cover the expense of living in a hotel or rental while your home is being repaired after a flood. But these types of coverage may be available from private flood insurance companies.

Some private flood insurance policies are underwritten by surplus lines carriers. These are insurance companies that cover things standard insurers won’t. Surplus lines carriers are regulated and monitored to make sure they remain solvent.

However, surplus lines carriers don’t need to pay into a state’s guaranty fund the way standard, or “admitted,” insurance companies do. A guaranty fund will pay policyholders’ claims if an admitted insurance company goes out of business. If you’re insured by a surplus lines carrier that goes under, you won’t have the same protection.

Still not sure whether private flood insurance is right for you? Here are a few pros and cons to consider.

• Policies from private companies usually offer higher coverage limits than the NFIP maximums, and often a broader range of coverage.

• There’s typically a shorter waiting period than the 30-day federal window.

• Private flood insurance may be cheaper for some homeowners.

• Mortgage lenders may occasionally reject private flood insurance, requiring that you go with a federal policy.

• If you drop NFIP insurance and buy private coverage, you may face a steep rate increase if you return to the NFIP.

• Some private companies won’t insure all types of properties. Common restrictions include mobile homes, houseboats and properties that have recently flooded.

• NFIP policies have the backing of the federal government, which could offer more security than a private company that could potentially go out of business.

Below are a few widely available private flood insurance companies that may be able to provide coverage for your home. Keep in mind that these are just a starting point. An independent insurance agent may be able to help you find other alternatives in your area.

The EZ Flood policy from Aon Edge covers your home’s structure up to $1.25 million and your personal belongings up to $875,000, with options to add coverage for swimming pool cleanup, spoiled food and living expenses should you need to relocate during repairs. A 15-day waiting period applies unless you buy your policy as part of a loan closing.

The company says it saves policyholders an average of 40% over NFIP coverage. EZ Flood insurance is available through agencies across the U.S., except in Alaska, Hawaii, Kentucky and Washington, D.C.

Because Chubb specializes in coverage for high-end homes, its flood insurance policies go far beyond the NFIP’s offerings. You can insure your home’s structure and contents up to a combined total of $15 million, and the company will also pay for damage to personal possessions and built-in items in your basement. Additional living expenses, if you have to temporarily relocate, are included too, as is debris removal up to $250,000.

If you’re under threat of a flood, Chubb will reimburse up to $5,000 for protective measures such as moving valuable items out of your home or putting sandbags around your foundation. Chubb offers flood insurance in 38 states plus Washington, D.C.

Available in Washington, D.C., and every state except Alaska and Kentucky, Neptune offers a slick website where you can get a flood insurance quote within a few minutes. Neptune’s flood insurance covers items an NFIP policy won’t, including damage to items in your basement, swimming pool refills and additional living expenses if you need to stay in a hotel while your home is repaired.

Its coverage limits are also significantly higher than the NFIP’s: up to $4 million for your home’s structure and $500,000 for its contents. Coverage takes effect 10 days after you buy the policy — or immediately if you purchase it in conjunction with a mortgage.

Private Market Flood insurance is sold by The Flood Insurance Agency, which also offers NFIP policies. The policies are nearly identical, but the agency’s private flood insurance policy has higher coverage limits: up to $500,000 for the building and up to $250,000 for contents. The waiting period can range from zero to 14 days, depending on the circumstances.

Private Market Flood policies are available nationwide, except in Kentucky, New York, Washington, D.C., and Florida’s Monroe County.