What Florida homeowners should know about private flood insurance

Wed May 08 2024

A rainbow over a Florida home

Nearly 3.5 million people are at risk for coastal flooding in Florida alone. But coastal homes aren’t the only ones that may need flood insurance – and people all across the US have learned this the hard way. Only about half the folks in high-risk flood areas had flood insurance, leaving them with catastrophic property damage and no help to pay for it. 

But homeowners have historically had few options when it comes to flood insurance. The National Flood Insurance Program (NFIP) is often their only option, and it acts as an insurer of last resort.

Fortunately, the tides are changing and private flood insurance is becoming more readily available. Here’s what you should know about the NFIP, private flood insurance, and how it may benefit you – and your budget.

A brief history of the NFIP

The National Flood Insurance Act of 1968 created the NFIP, which is managed by the Federal Emergency Management System (FEMA). The program was the result of too few private flood insurance carriers and an increase in federal assistance for flood disasters. The program’s goals are threefold: 

  1. Provide flood insurance.

  2. Improve floodplain management.

  3. Map flood hazard zones.

The NFIP has millions of policies in force, but providing flood insurance to homeowners isn’t its only goal. It also aims to improve floodplain management and mapping. In many ways, the program has been successful. 

The NFIP maps flood zones based on historical data to predict 100-year flood risk. That doesn’t mean a flood will only happen every 100 years in a given area. It means according to historical data, there is a 1% chance of a major flood occurring, but 100-year floods can (and do) happen more frequently. 

The rating system the NFIP created made it easier for private flood insurance companies to accurately price coverage based on the home’s proximity to water, elevation, and other hazards. Even better? In 2023, the NFIP introduced a new pricing approach to deliver actuarially sound rates that are both easier to understand and more reflective of a property’s flood risk. 

Coverage in an NFIP policy

While the NFIP has kept many homeowners from being completely uninsured for floods, its coverage is often too limited to meet the needs of homeowners. For starters:

  • Coverage doesn’t start until 30 days after the application is accepted by NFIP. 

  • Dwelling limits are capped at $250,000 regardless of the home’s actual rebuild cost.

  • There’s no coverage for loss of use or additional living expenses.

  • Contents coverage is limited to $100,000 regardless of how much personal property you have. 

  • Deductibles start at $1,000, and your personal property and dwelling have separate deductibles

The rise of private flood insurance

Private flood insurance wasn’t an automatic answer. The issue was twofold: Floods are hard to predict, and federal regulations prevented private insurers from offering flood coverage to homes with federally regulated mortgages.

Private insurers were slow to enter the market because there wasn’t a reliable way to measure flood risk. In recent years, they’ve developed sophisticated models to help predict, underwrite, and rate flood risk.

Federally regulated lenders also couldn’t accept private flood insurance for homes in certain flood zones that are required to have flood coverage. It took until 2019 for federal regulators to make it possible for these lenders to accept private flood insurance. The caveat is the coverage must be comparable to NFIP policies or better. 

Regulators decided to ease regulations in the hopes of helping people get affordable coverage so they don’t have to supplement with federal aid after natural disasters. After Hurricane Harvey, 738,000 people registered with FEMA for assistance, and it paid out $378 million for flood damage.

So far, it seems these changes are working for consumers. 

After decades of floods besieging US coastal communities, the private flood insurance market increased by 24% between 2016 and 2022. A total of 77 private insurers accounted for 32% of that business.

Why private flood insurance helps

Private flood insurers are helping drive down insurance costs in a couple key ways:

  1. More competition in the flood insurance market helps reduce costs. 

  2. More insurers helps spread out the economic risk so one insurer or program isn’t saddled with all the claims. 

Private flood coverage may cost as little as $500 a year for many homeowners, depending on their flood zone. If more people have flood insurance, it furthers drives down costs for everyone – another benefit of making the coverage affordable.

The benefits of private flood insurance

Because standard home insurance policies don’t offer flood coverage, private flood insurance allows homeowners to safeguard their homes and fill this gap in their coverage.

And if you work with us to insure a Florida or Louisiana property, we make it super easy to add flood insurance to your policy as an endorsement so you pay one premium and one deductible for both your home and flood insurance. Taking on an NFIP policy means you have to pay two premiums for the two separate policies (one for your home insurance, one for flood). 

Some additional perks of our flood insurance:

  • Increased dwelling protection. Unlike the NFIP limit of $250,000, Kin policies match the coverage of your homeowners dwelling coverage. 

  • No waiting period. Our coverage is effective immediately in Florida. In Louisiana, our flood coverage can be added when you apply or when you renew your policy.

  • No elevation certificate. We don’t require an elevation certificate, but you can submit one for a better discount. 

  • No separate flood deductible. Your AOP deductible or hurricane deductible applies to flood claims, depending on the circumstances of the flood.

  • Seasonal home coverage. We don’t charge extra for flood insurance for a vacation home, unlike the NFIP.

Getting flood protection has never been easier. Get a quote today.


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