Ask Kim

Kiplinger

Your New Flood Insurance Options

Kiplinger.com
[Question]

Now that it's hurricane season, I've been thinking about buying flood insurance. I hear that there's a 30-day waiting period to get coverage from the National Flood Insurance Program. Are there any alternatives?

[Answer]The National Flood Insurance Program (NFIP) was once the only game in town for homeowners seeking to insure their houses against heavy rains and overflowing rivers. But a growing number of private insurers now offer flood policies that usually have a shorter waiting period, higher coverage limits and may even cost less than the federal program.

SEE ALSO: 10 Things to Know about Hurricane Insurance Claims

The NFIP provides up to $250,000 of dwelling coverage and up to $100,000 of contents coverage. Policies in low-risk areas can cost as little as $456 per year; if, however, you live in a higher-risk area, coverage could cost you thousands of dollars (see FloodSmart.gov for more information about NFIP policies).

With private flood insurance policies, you can usually get higher dwelling and contents limits--often as high as those on your homeowners insurance policy. The waiting period for coverage to kick in is often less than 30 days; many private policies have a waiting period of 10 days or less--although insurers may place a moratorium on issuing new policies if a storm is on its way, says John Austin Tatum, an insurance agent in Abilene, Texas, who has been selling private flood insurance since 2014. In some areas, premiums can be a lot less expensive than NFIP coverage. Tatum cut his own flood insurance premiums from $1,500 to $500 when he switched from an NFIP to a private flood policy.

Compare the cost of several private flood insurance policies with NFIP coverage. "They all have different pricing points and sweet spots," says Tatum. Your homeowners insurance agent may sell flood coverage, or you can find an agent who sells NFIP coverage through FloodSmart.gov. To locate an independent agent who works with many insurers, go to Trusted Choice.

SEE ALSO: What You Need to Know about Homeowners Insurance in Hurricane-Prone States

Some states have more private flood insurance options than others. According to a study by S&P Global Market Intelligence, private flood insurers now account for 17% of all flood insurance premiums nationwide, with the biggest markets in Florida, California, Texas and New York. You may also find out more about the companies that sell private flood coverage in your area through your state's insurance department website, such as the list of private flood insurers from the Florida Office of Insurance Regulation.

For more information about NFIP and private flood coverage, see Getting Affordable Flood Insurance. Learn about protecting your home and finances from disasters at How to Disaster-Proof Your Home. For advice on financially recovering from a natural disaster, check out Rebuilding Your Home and Finances After Disaster Strikes.

SEE ALSO: 5 Ways to Protect Your Home From Summer Storms

EDITOR'S PICKS

Copyright 2018 The Kiplinger Washington Editors

More from Kiplinger.com

See more stories in this category

Back to Previous Page

Ask Kim

A Tax-Friendly Way to Get Income for Life

[Question]I heard that you can use $130,000 in an IRA to buy a deferred-income annuity without having...

Minimum Age for Tax-Free IRA Gifts to Charity

[Question]I'm 69 years old, and I'm trying to determine if I can transfer money from my IRA to charity...

How Tracking Rewards Good Drivers

[Question] My insurer offers a data-tracking program that gives a discount based on my driving habits...

Adding a Roth IRA in Retirement

[Question] I retired as a real estate agent, but I still receive a few thousand dollars a year for...

How New Grads Can Buy Health Insurance

[Question]My daughter just graduated from college and doesn't yet have a job that offers health...

Next Page >
Provided by Kiplinger