Both options have their pros and cons, so it’s important to weigh them carefully before making your decision. Let’s take a closer look at each one.
Takeaways:
- A Flood insurance policy protects against damage caused by flooding and covers the cost of repairing or rebuilding your home up to the policy limits and certain personal belongings that were damaged or destroyed.
- Nearly everyone can benefit from flood insurance, not just those living in high-risk flood areas.
- NFIP is a government program administered by FEMA. As the industry-leading public flood insurer in the U.S, they offer widely accessible coverage to repair flood-damaged property.
- Private flood insurance companies like Neptune provide robust coverage customized to meet your exact needs and lifestyle. Some benefits include coverage limits of up to $500,000 on personal property, the ability to insure your belongings to full replacement cost, no-hassle underwriting, and wide lender acceptance.
What is Flood Insurance and what does it cover?
Flood insurance is a type of insurance that helps to protect against damage caused by flooding. It can cover the cost of repairing or rebuilding your home and replacing certain personal belongings that were damaged or destroyed. The amount of coverage you need will depend on the value of your home, personal belongings, and the extent of the flood risk in your area.
Who needs flood insurance?
If you don’t live in a coastal town, is flood insurance necessary? The answer is likely yes as flood damage from your home can happen in many ways.
Flood events include the following:
- Storm-related flooding from the river, coastal waters, and lakes
- The collapse of water-related structures — seawalls, dams, levees, etc.
- Heavy rain that results in water pooling in low elevation areas
- Mudflow in typically dry areas
Flood insurance can also be contractually required. This includes those with a mortgage from a federally backed or federally regulated lender and those with a mortgage backed by a federal agency like the Federal Housing Administration, Department of Agriculture, or the Department of Veterans Affairs.
So, if you’re living in an area with a high risk of flooding (and, even if you don’t), it’s probably wise to consider flood insurance. As the saying goes, it’s better to be safe than sorry.
Private Vs. Public Flood Insurance: What’s The Difference?
Public flood insurance is purchased through the NFIP — a government program administered by FEMA. The program was created to increase the availability to help people living in high-risk flood zones get insurance. However, any program designed for the masses is not going to be right for everyone. With the recent rating change to NFIP 2.0, those who had favorable rates could see an increase. Additionally, those who might expect a favorable rate may be surprised to see a rate that is higher than expected.
In contrast, private flood insurance is purchased through a private insurance company and is not regulated or backed by the government. The rating methodology for private flood insurers is different than that of the NFIP and so some might find a more favorable rate by quoting with a private insurer like Neptune Insurance. Private Flood Insurers use computer generated algorithms to determine flood insurance rates. In some cases, private flood insurance can be 50% or more less expensive than FEMA flood insurance. Perhaps one the greatest benefits is the ability to customize. The private flood insurance provider Neptune allows a suite of customizations so that policies meet the unique needs of its customers instead of a one size fits all solution.
FEMA’s National Flood Insurance Program (Public)
FEMA’s National Flood Insurance Program (NFIP) still serves as the base policy for most homes insured for flooding. The public program actively insures 3.4 million homes and covers 91% of the flood policies in the United States. For decades, flood insurance was considered too big a risk for most insurers, leaving homeowners with few options. With nearly 75% of declared disasters in the U.S. involving flooding and most flood-related risks not covered by standard homeowner or business insurance policies, the market gap left millions of property owners without viable coverage options. The NFIP was created in 1968 to address this market gap and offer universal access to flood coverage for U.S. homeowners and businesses.
Neptune Flood Insurance (Private)
Established in 2016, Neptune Flood Insurance redefines the flood market by bringing affordable coverage for high-value homes with potential savings of up to 25%. Neptune Flood leverages LiDAR technology, the same tech used by NASA and the US military, to build its flood risk maps. Using advanced technology makes it possible to predict flood risk more accurately, creating a market for private flood insurance policies that exceed the coverage of traditional NFIP policies.
Neptune’s policies are designed to be a plug-in replacement for NFIP policies, but with options to expand coverage limits and broaden policy coverage through customizable policy endorsements. With more innovative techniques to assess risk more accurately, this tech-savvy insurer offers higher available coverage limits, competitive rates, and coverage that addresses the gaps often left behind by traditional policies.
Expanded Coverage Options:
- Replacement cost for contents coverage: Policies with replacement cost for contents coverage provide coverage for belongings based on a depreciation deduction. This structure leaves many homeowners underinsured. Neptune Flood lets you insure to full replacement value, giving you the protection you need if disaster strikes.
- Temporary living expense: When a covered claim forces you to leave your home, your Neptune Flood policy can help pay for additional living expenses such as lodging or the extra cost of eating out with up to $10,000 in added protection.
- Basement contents coverage: Standard NFIP policies limit basement coverage to attached fixtures and select appliances. Neptune Flood can insure up to $10,000 in personal property in your basement.
- Pool Repair & refill: Standard NFIP policies exclude pool coverage, leaving a potentially costly gap in protection. With Neptune, you can choose the coverage you need to repair and refill your pool after a covered loss.
- Coverage for additional buildings: Protect additional buildings on your property with up to $50,000 in added coverage for all unattached structures, such as detached garages, pool houses, and more.
Contact Coastal Insurance today for affordable flood Insurance.
Don’t get caught in the eye of the storm, uninsured. Coastal Insurance works with the nation’s leading insurers for flood coverage and high-value home insurance. Our team of experienced agents will help you design a customized protection package that safeguards your lifestyle from floods, fires, and the unexpected at the best price possible. Contact the experts at Coastal Insurance today to learn more.
Frequently Asked Questions
Neptune's flood policy offers the same fundamental coverage as the NFIP (National Flood Insurance Program). However, the key difference lies in the potential for expanded or more comprehensive coverage options when you choose Neptune. Unlike the NFIP, Neptune provides the opportunity to select additional coverage options that can enhance your policy. For instance, while NFIP coverage is restricted to fixed building coverage, Neptune's options can include coverage for external structures and provisions for temporary living expenses if your home becomes uninhabitable.
Yes, this policy aligns with the definition of private flood insurance as outlined in 42 U.S.C. 4012a(b)(7) and the corresponding regulation. Additionally, it does not contain any provisions that are not in accordance with 42 U.S.C. s. 4012a(b). However, it's important to verify with your lending institution whether a private flood policy will meet the specific requirements of your loan.
Neptune provides the option for higher coverage limits than what is available from the National Flood Insurance Program:
| MAX. HOME COVERAGE | MAX. CONTENT COVERAGE | |
|---|---|---|
| NEPTUNE | $4,000,000 | $500,000 |
| NFIP | $250,000 | $100,000 |
Neptune provides a wide variety of coverage options so that each homeowner can customize coverage to best protect their assets:
| Basement Contents | up to $10,000 |
| Pool Repair & Refill | up to $10,000 |
| Unattached Structures | up to $50,000 |
| Temporary Living Expense | up to $10,000 |
No, the waiting period is not the same. Neptune offers a reduced waiting period of only 10 days compared with the 30-day waiting period with the NFIP. Additionally, there is no waiting period when a Neptune policy is purchased for a loan closing.
Yes, you can expect an entirely different claims experience. It is well known that government processes can be complex and not service oriented. Neptune will walk you through the process of reporting and resolving your loss as quickly as possible. They deliver astonishing service so you can focus on what matters most.
With Neptune Flood Insurance, you have the flexibility to choose from six deductible options, ranging from $1,000 to $25,000. Your deductible represents the initial amount you are responsible for paying before your insurance coverage comes into play. In the event of a covered loss, Neptune will cover the portion of the loss that exceeds your chosen deductible amount, up to the coverage limits you have purchased. Your selected Deductible amount is clearly indicated on your Declarations page. It's worth noting that for each flood-related loss, the Deductible amount is applied separately to Building (Coverage A) and Contents (Coverage B) as specified in your policy.
About the Author
David W. Clausen is the CEO of Coastal Insurance Solutions. With over 20 years' experience and over 1 billion insured, David and Coastal Insurance Solutions are the recognized leaders in high net worth insurance. For the fourth consecutive year, David Clausen has been awarded Top Producer by Insurance Business America and the 2023 Agents of The Year by Insurance Journal. David is a trusted high net worth insurance expert who’s published more than 200 articles. His articles & press releases have generated over 500K pageviews and has been featured on blogs such as Google News, Yahoo Finance, CNBC, Market Watch, Fox, The New York Times, etc. David founded Coastal Insurance Solutions in 2001 after earning a BBA from the State University of New York College at Oswego.
