The Difference Between Private Flood Insurance and NFIP Coverage

Many people have become familiar firsthand with the importance of flood insurance. Torrential downpours or even extended periods of steady rain, as well as rapid snowmelt or broken levees and water mains, can all lead to floods and subsequent property damage. These potential losses may necessitate flood insurance, as such incidents are typically excluded from standard homeowners, commercial property and renters insurance policies. Understanding your options is critical.

Where Can I Get Flood Insurance?

Flood insurance policies are typically available through the following two options:

• National Flood Insurance Program (NFIP) plans—This program is operated by the Federal Emergency Management Agency and is available in many participating communities throughout the United States.

• Private flood insurance—In recent years, flood mapping and risk calculation have helped the private insurance market develop its own insurance options, whereas many people may have previously only had NFIP policies as an option.

Which Type Is Right for Me?

There are often several key differences between policies available through the NFIP and those purchased on the private market. Specifically, you may encounter distinctions involving the following aspects of available coverage:

• Policy limits—Private flood insurance policies may include higher coverage limits than those available through the NFIP. This can be critical if you have a particularly valuable home or possessions.

• Loss-of-use coverage—NFIP plans typically do not offer loss-of-use coverage, which can help offset hotel stays and other costs if your home is rendered uninhabitable due to a flood. This coverage may be available in the private market from some insurers.

• Costs—Because NFIP coverage options are subsidized by the government and may have lower policy limits, they may generally be more affordable. However, you should avoid being underinsured just to lower your rates.

We’re Here to Help

Contact Pronto Insurance in Palatine, Illinois, today to learn more about flood insurance and compare coverage options available near you.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.