Insurance comes in many forms to safeguard you and your property, from health and life insurance to auto and homeowners insurance. While choosing the right coverage can be daunting, it is crucial for protecting our well-being and belongings both now and later. One often overlooked type of insurance for homeowners is flood insurance. Since most standard homeowners insurance policies do not cover flood damage, you will need to purchase flood insurance as an additional policy.
Top 10 Flood Insurance Providers for 2024
- Geico
- Allstate
- Chubb
- USAA
- American Family
- Aon Edge
- Neptune Flood
- Progressive
- Farmers
- Liberty Mutual
Your risk of flooding varies depending on where you live, so flood insurance may not be necessary or desirable for everyone. However, even minor water damage can cause severe destruction, and federal disaster relief has its limits. As with any insurance policy, you’ll need to weigh the potential benefits against the costs of a policy that you might never use. It’s essential to understand what flood insurance covers, who is most likely to benefit from it, and how to select the right insurance provider for your needs.
What does flood insurance mean?
Flood insurance is a specialized type of property insurance designed to cover damage from flooding. Unlike other types of water damage, such as from a burst pipe or a leaky roof, flood insurance addresses damage caused by natural disasters like hurricanes or heavy rainfalls. Floods are classified as a ‘force majeure’ event in insurance terms, distinct from typical home water issues like plumbing failures or sewer backups. While homeowners insurance might cover these common water problems, it usually excludes coverage for flood damage.
Flood insurance is a separate policy from standard homeowners insurance and covers damage specifically caused by floods rather than other types of water issues. While homeowners insurance might cover things like burst pipes, flood insurance is required for damages from natural disasters like floods. Policyholders pay premiums on a monthly or yearly basis for coverage that helps cover repair costs or replacement of damaged property. Although often optional, flood insurance may be mandatory for high-risk areas, and renters can also purchase it, though it only covers personal belongings, not the building itself.
What Is the National Flood Insurance Program (NFIP) All About?
The National Flood Insurance Program (NFIP) was established as a federal law in 1968 and is managed by the Federal Emergency Management Agency (FEMA). The program was created to address the increasing costs of flood damage, which were not fully covered by federal emergency aid. Its main objectives are to provide financial protection for both residential and business property owners affected by floods and to minimize future flood damage. Since its inception, the NFIP has offered flood insurance to over five million policyholders nationwide. The program continues to evolve with increased funding in response to major natural disasters such as Hurricane Hugo in 1989, Hurricane Katrina in 2005, and Hurricane Harvey in 2017.
The NFIP partners with more than 50 private insurance companies to offer federally-backed flood insurance. While consumers purchase policies through these private insurers, the NFIP oversees policy rates and coverage limits. They determine these based on factors such as location, building condition, flood zone classification, and the number of insured homes in the area. FEMA works with the NFIP to classify flood zones into categories like A, B, C, D, V, or X, which are further divided to assess flood risk. Zones A and V represent high-risk areas, Zones B, C, and X denote low to moderate risk, and Zone D indicates an area without a determined flood risk. Each community must provide a Flood Insurance Rate Map (FIRM) that allows residents to check their flood risk level.
Top 10 Private Flood Insurance Providers for 2024
Geico
As one of the largest insurance providers in the U.S., Geico offers relatively low average premiums for flood insurance compared to other companies. They also provide discounts for bundling flood insurance with home or auto policies. With a broad network of local agents nationwide, you can easily get a quote or file a flood claim. However, there are some limitations to their coverage, such as exclusions for carpets and personal property stored in a basement, and homes that are built on or partially over water, like those on stilts by a shoreline, are not eligible for coverage.
Allstate
Allstate receives high praise for offering flexible flood insurance plans that allow homeowners to customize their coverage rather than choosing a standard policy. Depending on your location, Allstate might offer unique options like coverage for lawn and garden damage or damage from sewage backups that other companies don’t provide. While Allstate’s premiums are generally higher than those of many competitors, you can lower your costs by bundling flood insurance with other Allstate policies, such as auto, home, or life insurance.
Chubb
For homeowners with high-value properties, Chubb is likely to provide the most extensive coverage options since it operates as a private company and is not restricted by NFIP regulations. Chubb offers some of the highest coverage limits available, up to $15 million for both structure and contents, far surpassing the NFIP’s $250,000 coverage cap. Their policies also cover many items excluded by other insurers, such as basement belongings, carpets, and personal effects. While this level of coverage comes with higher monthly premiums, the exact cost will vary based on several factors.
USAA
The United Services Automobile Association (USAA) offers insurance exclusively to veterans, current U.S. Military members, and their families. In addition to auto insurance, USAA provides flood insurance up to the NFIP maximum coverage of $250,000 for structures and $100,000 for personal property, with some options to exceed these limits. USAA offers a quick and affordable insurance solution with premiums often below the national average, and policyholders may even receive discounts or rebates if they don’t file a flood insurance claim within a certain period.
American Family
With nearly a century of experience in offering various insurance products, American Family provides flood insurance across all 50 states. Their flood policies cover a range of protections including dwelling units, personal property, carpeting, window treatments, electrical and plumbing systems, furniture, cabinetry, and HVAC systems. American Family collaborates with the federal government for its flood insurance and adheres to the regulations established by the NFIP.
Aon Edge
Aon Edge offers specialized private flood insurance as its sole insurance product, which allows it to provide high coverage limits, including up to $5 million for structures and $875,000 for personal property through plans like EZ Flood (its standard option) and Excess Flood (its extended coverage). Additionally, Aon Edge offers riders for coverage on swimming pools, spoiled food, and temporary living expenses for those displaced by flooding. These policies are available in almost all states, though they are not offered in Washington D.C., Hawaii, Alaska, and Kentucky.
Neptune Flood
Neptune Flood is a private flood insurance provider operating in all states except Kentucky and Alaska since 2016. The company focuses on a convenient online quote system and offers coverage for scenarios beyond traditional insurance policies, including damage to basements, swimming pools, detached structures like sheds and garages, as well as reimbursement for temporary living expenses. Neptune Flood’s policies offer coverage up to $4 million for structures and $500,000 for personal property.
Progressive
Progressive provides flood insurance through the NFIP, offering standard coverage limits of up to $250,000 for buildings and $100,000 for personal items. You can get a flood insurance quote from a Progressive agent and add flood coverage to your existing homeowners policy.
Farmers
Farmers Insurance provides two main types of flood insurance: a standard risk policy for high-risk flood areas and a preferred risk policy for low to moderate-risk areas. For the standard policy, Farmers uses NFIP rates to set premiums and coverage, but the preferred policy offers up to 25% in discounts. Additionally, Farmers Insurance offers optional riders to enhance coverage for valuable items like artwork or jewelry.
Liberty Mutual
Liberty Mutual doesn’t offer flood insurance on its own but provides access to policies through the NFIP and the WYO (Write Your Own) Program. Current Liberty Mutual policyholders can reach out to their agent for information on how to obtain flood insurance.
What Is Covered by Flood Insurance?
Flood insurance coverage amounts can differ depending on the plan you choose. To make a claim, the damage must be directly caused by a flood. Policies are generally divided into two main types: building coverage and contents coverage. Building coverage reimburses for repairs or replacements of structural elements and home systems like HVAC units, water heaters, electrical systems, and appliances such as stoves and refrigerators. It also covers structural repairs including flooring, cabinetry, foundations, and detached garages.
Contents coverage protects personal items inside your home, including appliances, furniture, electronics, and clothing, as well as valuables like art. However, it typically excludes vehicles, cash, important documents, and outdoor property like pools or hot tubs. NFIP-backed policies offer standard coverage and restrictions, while private insurers may provide more extensive coverage and higher payout limits.
What Is the Cost of Flood Insurance?
The price of flood insurance depends on various factors including your flood risk level and flood zone designation. Other considerations are your home’s age, condition, elevation, and utility placement. FEMA, through the NFIP, assesses these elements to determine your flood insurance premiums. Typically, flood insurance rates are higher in northeastern states like Connecticut and Vermont, whereas they are lower in southeastern states such as Florida and Texas, where more homeowners have flood insurance.
Generally, those in higher-risk flood zones face lower insurance costs compared to those in low-risk areas due to a larger pool of contributors and the NFIP’s goal of encouraging coverage in flood-prone regions by maintaining more affordable rates.
What Defines a Flood Zone?
When you begin looking for flood insurance, you’ll come across the term ‘flood zone’ in your quotes. Every location falls into some kind of flood zone, which means FEMA has classified it into one of three risk categories: low, moderate, or high. FEMA produces and updates community flood maps to display these zones.
Flood zones marked with an unshaded X or a C are classified as low risk, indicating a less than 0.2% chance of flooding each year, also known as a 500-year flood zone, due to their higher elevation. Zones marked with a B or a shaded X represent moderate risk, with a 0.2% to 1.0% chance of flooding annually, or a 100- to 500-year flood zone.
High-risk zones are designated A or V, reflecting areas with over a 1.0% annual flood risk, also called a 100-year flood zone. Zone A includes various sub-categories based on elevation, proximity to water bodies, or the condition of levees, while Zone V is specifically for coastal regions. Zone D is used for areas where flood risk has not been assessed yet, and zones labeled A or V are identified as Special Flood Hazard Areas (SFHA).
Comparing NFIP Flood Insurance with Private Insurance Options
When looking for flood insurance, you essentially have two main choices: NFIP flood insurance or private flood insurance. The National Flood Insurance Program (NFIP) is a government-run initiative that works with private insurers to provide basic flood protection, with coverage limits and pricing determined by FEMA’s flood zone assessments.
On the other hand, private flood insurance offers more flexible coverage options and is not bound by federal limits, allowing for potentially higher coverage amounts for homes and businesses. While federal disaster assistance might be available in severe flood situations, it often falls short of covering all expenses, which is why some homeowners prefer to have their own flood insurance policy. Both NFIP and private flood insurance offer solid protection, but each has its own set of benefits and drawbacks that you should consider.
These policies are available nationwide from major insurance companies like Allstate, Geico, and Farmers, which might also offer discounts if you bundle them with other policies. NFIP coverage is capped at $250,000 for building damage and $100,000 for personal property, which may be sufficient for many households but may not cover all high-value items. In contrast, private insurance plans offer higher coverage limits and additional options, including protection for basements, personal belongings in basements, detached structures, landscaping, and temporary living expenses due to flooding. Although NFIP policies are more commonly purchased, private flood insurance is gaining popularity and can sometimes be more affordable.
Ways to Reduce Your Flood Insurance Costs
Not every homeowner will need to buy flood insurance, but it might be a worthwhile investment for your peace of mind, or it might be required by your lender as part of your mortgage agreement. If you decide to get flood insurance, you’ll need to find the best balance between your monthly expenses and the coverage you receive.
One approach to lowering the cost of flood insurance is to reduce your personal risk through property modifications and upgrades. Simple improvements like raising your utilities to prevent flood damage or installing flood openings in basements can help lower your rates. More significant changes, such as filling in your basement or raising your home, can also lead to reduced premiums. If you can’t make physical alterations, opting for a higher deductible can decrease your monthly insurance costs, though it will increase your out-of-pocket expenses in the event of a flood.
To find the most affordable flood insurance, it’s important to shop around and compare different options. While NFIP rates are generally consistent across providers, you might be able to save money through discounts if you bundle multiple policies with the same insurer.