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4 Surprising Differences Between Private and Federal Flood Policies

Updated: Sep 14, 2023

Your ultimate guide to the differences between private and federal flood policies

Private flood policies are relatively new on the market so when considering which policy fits your needs it's important to know the facts. 1st Direct has you covered! Check out the 4 most surprising differences between Private and Federal flood policies.

Most flood insurance policies are traditionally written through a FEMA administered plan called the National Flood Insurance Program (NFIP). Until recently, if you had a federally-backed mortgage and you lived in a high-risk flood zone, your mortgage company would require you to buy flood insurance exclusively through the NFIP. However, in 2019 federal regulators opened the door for mortgage companies to accept private flood insurance policies provided they abide by certain guidelines. This was a game-changer for policyholders and insurers alike. Private flood insurance is becoming more common with over 100 different companies that offer flood policies. (Don't worry, 1st Direct does all the work for you to get quotes from multiple companies and helps you find the right fit).

That means more options!

You now have more options so you can get the exact policy that fits your needs. We have outlined the top 4 surprising differences between the NFIP and private insurance policies.


#1: Coverage Limits

This might be one of the biggest differences and could be the most important to you depending on your home’s value and how much you owe. Residential flood insurance policies through the NFIP have a maximum building coverage limit of $250,000 and a contents limit of $100,000. Private policies may offer higher coverage options regardless of the value of your home. You may also purchase a private policy as an excess policy, meaning if you have an NFIP policy you may purchase additional coverage through a private flood insurance carrier to supplement the underlying policy.

#2: Additional Coverage

Private carriers have the ability to cover many additional items that the NFIP does not. Some of these items can include:

  • Basement Contents

  • Replacement Cost for Contents

  • Replacement Cost for Secondary Residences

  • Temporary Living Expenses / Loss of Use

  • Pool Repair and Refill

  • Deck Repair

  • Unattached Structures

#3: Availability

NFIP flood insurance is available in all 50 states, plus U.S. territories if the property is in a participating community. Private flood insurance availability varies depending on the insurance company and your location. Particularly high-risk areas may not have as many options through a private carrier.

One of the other areas of concern raised by some is the potential of non-renewal when the private policy expires. While the private flood carriers certainly have more flexibility in their policy issuance programs as compared to the NFIP, most private policies do in fact renew without large premium changes. If the private policy should non-renew or experience a premium change, your agent should be reviewing your options with you prior to renewal to make sure you have access to other private options or the NFIP.

#4: Waiting Periods

When you buy flood insurance there may be a waiting period before the policy goes into effect. Through the NFIP there is a mandatory waiting period of 30 days from the day of payment before coverage begins. There are exceptions, however, for loan closing requirements and map changes. Some private flood policies cut that time in half or more. Typically, the waiting periods are 15 days or less. Understanding the waiting period for the various policies and carriers that are available may have an impact as to which policy is right for you. Luckily The Flood Authority team at 1st Direct is here to help you navigate the options and help you choose the best plan to protect your biggest asset. Visit our Request a Quote page to get started and compare quotes from both NFIP and private flood insurance options.

It is First Direct’s recommendation that any policy related decisions be thoroughly discussed and reviewed with a licensed insurance agent prior to changes or purchases taking effect.

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