Homeowners can purchase private insurance to supplement their federal flood insurance or purchase a fully private policy. Private coverage is offered by independent companies including Lloyd’s of London, TypTap and Aon Edge. It often offers much higher coverage limits as well as additional benefits such as “downtime” which is used to pay for your home when your home is uninhabitable. However, private insurers don’t have to offer you coverage if they think your property is too risky. And they can refuse to renew your policy if your property is actually damaged by a flood.
Unlike federal flood insurances, private policies usually don’t include a surcharge for second homes, which can significantly increase the annual premium.
Mr. Braley cited an “extreme” example: A small historic home in Oak Bluffs on Martha’s Vineyard received a private policy of $ 1,700 a year, compared to $ 11,800 for a federal policy.
It’s worth getting a quote on private coverage to compare it to federal coverage to see which one works best for you, said Amy Bach, executive director of United Policyholders, a consumer protection agency.
Here are some questions and answers about flood insurance:
Is flood insurance required?
If you have property in a high risk area, your mortgage lender will likely require that you get flood insurance. However, you may want to purchase coverage even if your home is in an area that has traditionally not been flooded. A quarter of flood damage comes from property outside of high risk areas, according to FEMA, but most homeowners in those areas are eligible for lower prices.
Because of climate change, not only properties near the coast are threatened by flooding, said Bach. Inland homes can be inundated by heavy rain, and lots near hillsides devastated by forest fires can suffer erosion, causing damage from flash floods.
“Don’t assume that if your area hasn’t been flooded, it won’t be,” she said. “We are in a new era.”
According to FEMA, an inch of water can cause $ 25,000 in damage.