Flood insurance is often an afterthought, or an option waved off by homeowners when purchasing insurance coverage for their home. However, every year, the National Flood Insurance Program (NFIP) pays nearly 25% of its claims on properties in low risk areas. Nature is often unpredictable, making flood insurance worth a closer look and the NFIP isn’t your only coverage option. Here are our top picks for the 5 best private flood insurance companies.
What is flood insurance?
Much like homeowners insurance, flood insurance protects your property, including buildings and your belongings. A flood insurance policy limits the covered risks to flooding, which can include overland flooding but can also include mudslides. Other types of water damage may be covered by your homeowners insurance policy.
Why do I need flood insurance?
Your home insurance policy can protect your home against nearly any risk, but damage due to flooding is specifically excluded on a standard home insurance policy. You’ll find a section in your home insurance policy that explains which types of water damage are covered (and which aren’t). However, the easiest way to understand floods is to determine whether the water touched the ground before entering your home. In most cases, this can tell you whether the damage is covered by home insurance or whether your flood insurance policy might come to the rescue. Damage caused by water that touched the ground before entering your home probably isn’t covered by a home insurance policy.
You may also find some gaps between what a standard homeowners insurance policy won’t cover and where your flood insurance coverage begins. However, most water damage risks to homes can be covered by using both a home insurance policy and a flood policy. Ask your agent about important endorsements to help bridge the gap. For example, coverage for drain backups can often be added to a home policy inexpensively.
Floods and surge events can be costly. The NFIP reported an average claim of nearly $117,000 for flood-related damage from Hurricane Harvey. Superstorm Sandy resulted in over 130,000 NFIP claims and affected 16 states. None of these claims would be covered by a standard home insurance policy. Without the extra protection of flood insurance, many parts of the country might look quite different today in regard to both home ownership and economic activity.
In some cases, flood insurance is a requirement imposed by lenders. In other cases, it’s simply a wise purchase. Claims can affect low-risk areas as well but coverage is often more affordable for low-risk areas. In summary, in high-risk areas, it’s hard to argue with the wisdom of purchasing coverage, whereas in low-risk areas, flood coverage can be very affordable, providing an inexpensive way to protect your home.
What does flood insurance cover?
Painted with a broad brush, flood insurance covers damage to your home and personal belongings due to flood waters, surges, or mudslides. However, it’s also useful to understand how a flood policy provides protection. We can start with an overview of how flood insurance through the NFIP works, but it’s important to review the coverage provided by private insurers as well.
Coverage for buildings
Much like your home insurance policy, your flood insurance policy provides coverage for your home itself, meaning the building. Coverage for your home is provided as replacement value coverage which means your policy will pay to rebuild without a deduction for depreciation. However, there are some limits to consider.
NFIP policies only cover losses of up to $250,000 for flood damage to your dwelling and attached items, such as furnaces, cabinets, and installed flooring. Private market flood insurance policies can cover larger home values.
Coverage for personal property
Your flood insurance policy can also help cover the cost of repairing or replacing your flood-damaged belongings. However, coverage limits apply here as well, with NFIP policies providing coverage up to a limit of $100,000 for personal property, also known as contents coverage. Unattached items, like washing machines, furniture, and electronics fall into this coverage type.
Contents coverage on an NFIP policy uses actual cash value to determine the insured value of items in your home. This means that your claim payout will have a deduction for depreciation due to age or wear and tear. NFIP policies also exclude personal property stored in a basement or outside. Some private flood insurance providers can cover these losses.
Private flood insurance vs. NFIP insurance
Coverage limits may be the most obvious difference between NFIP policies and private market options. However, you’ll also find some other key differences. In particular, you can see some big differences in price, documentation requirements, and even in the way coverage applies.
Flood coverage through the NFIP follows a specific definition that requires complete inundation of 2 acres of land (or more) or inundation of 2 or more properties before coverage applies. This definition doesn’t line up exactly with the flood exclusion on home insurance policies, leaving justified reason for concern among homeowners. In most cases of flooding, NFIP insurance would provide coverage — but there are gaps. Some private market insurers simplify the definition of flooding so that your coverage is seamless leaving no space between your home insurance policy’s exclusions and where your flood coverage begins.
Another extra you’ll often find with private flood insurance is that contents coverage can be provided at replacement cost, which means you won’t have a deduction for depreciation in many cases. You’ll also find better coverage if you store some items in the basement.
Deductibles may be higher with private flood insurance, however, and for some homes the safety of a FEMA-backed policy may be a better fit. Fortunately, homeowners in many areas now have a choice.
Best private flood insurance companies
For many years, the flood market was deemed too risky for private insurers. Today, however, technology allows better ways to measure risk and price premiums. Better efficiency — combined with recent changes in NFIP policies that allow homeowners to replace their FEMA flood policy — now makes private flood insurers worth a closer look. Here are some of the best private flood insurance companies from a now-growing field.
Just 3 years young but run by seasoned industry veterans, Neptune Flood quickly emerged as a leader in the private flood insurance market. Designed as a plug-in replacement for an NFIP policy, a flood insurance policy with Neptune brings several advantages including higher coverage limits, shorter waiting periods, and broader coverage options. In addition to expanded coverage, Neptune offers annual savings of up to 25%. Coverage is now available in nearly 40 states.
Starting with dwelling coverage limits, the differences already become clear. While NFIP policies top out at $250,000 in coverage for your home itself, Neptune offers coverage limits of up to $2 million. Contents coverage follows a similar pattern with Neptune policies offering up to $500,000 in coverage compared to just $100,000 through the NFIP.
Increased coverage limits with the potential for lower rates make Neptune a provider worth a closer look.
TypTap is more than just a new company with a catchy name. This provider for flood and home insurance is part of HCI Group, a well-established publicly-traded company with strong financials and a growing position in key markets like Florida. TypTap’s expanding service area now includes NJ, PA, MD, SC, TX, CA, and FL.
Credited with being Florida’s first private flood insurance provider, TypTap recently surpassed $50 million in annual premiums, growing fourfold in a single year. This dynamic growth can be attributed to TypTap’s reputation for lower premiums and easier underwriting when compared to NFIP policies in many areas.
Extras like available coverage for additional living expenses if your family is displaced by a claim help set TypTap apart. Replacement cost coverage on contents also makes a TypTap policy an attractive option to an NFIP policy.
Aon Private Flood
A leader in specialty insurance markets since the 1980s, Aon now offers Aon Edge, a widely accepted flood insurance solution trusted by over 3,000 lenders. As with some other private flood insurance providers, Aon streamlines the application process and offers simplified underwriting, helping to speed your coverage placement.
Aon offers 2 options, so you can expand the coverage of an existing NFIP policy, bumping coverage limits from $250,000 up into the millions with an excess flood policy — or replace the NFIP policy altogether. Aon Edge provides one of the easiest applications in the business, with only 12 underwriting questions and no elevation certificates required.
If buying coverage at the time you’re buying a home, there’s no waiting period for Aon’s flood policies, making the company worth a close look for homebuyers.
Launched in 2016, Hiscox’s flood insurance offering, called FloodPlus, offers coverage for homes insured for up to $1 million, 4 times the coverage limit for NFIP policies. Extras include additional living expenses if displaced by a flood claim, coverage for unattached buildings, and coverage for personal property worldwide with limits up to $500,000.
Like some other private flood programs, FloodPlus offers coverage that picks up where your home insurance leaves off, eliminating the troublesome gap left by NFIP policies. You’ll also have the choice of replacement cost coverage or actual cash value for your personal property. By contrast, NFIP policies only provide actual cash value coverage for most items and only when located on the first floor (or above) inside the home.
An easy application process — without the 30-day wait — and a streamlined process that doesn’t require an elevation certificate earn Hiscox a place on our list of the best private flood insurance companies.
Johnson & Johnson Insurance
With a history dating back to 1930, Johnson & Johnson Insurance has become a well-respected provider of both personal lines and commercial lines of insurance. Johnson & Johnson’s excess flood coverage is designed to compliment NFIP coverage and extend coverage limits beyond the fixed limits found on FEMA policies.
Excess flood coverage works similarly to excess liability coverage or an umbrella policy. By extending coverage limits of existing policies, these types of products can reduce the overall cost of insurance. In effect, the extended coverage often costs less per dollar of protection than the qualifying policy, an NFIP policy in this case. Pairing policies this way helps address gaps in coverage, particularly for high-value properties.
As a family-owned business with a long history of customer service, Johnson & Johnson has earned its place on our list of the best private flood insurance companies.
Choosing the best private flood insurance
Loosened federal restrictions paired with technological advances continue to bring more companies into the private flood insurance market. Price is often one of the main attractions for homeowners who want to protect their homes against flood damage. However, it’s important to consider the big picture and essential to partner with a company that has the financial strength to withstand stormy weather. Your independent agent can guide you through the process of getting coverage and help ensure you understand the protection your policy provides.
Standard flood insurance through the NFIP has its limitations. Fortunately, the best private flood insurance companies offer plenty of ways to supplement your FEMA coverage or even replace it altogether.