Although Private Flood Insurance has been around for several years, it has spread rapidly since 2012. Due to the growing debt of the National Flood Insurance Program (NFIP); The Biggert-Waters Flood Insurance Reform Act of 2012 was put into place to essentially save the program by reducing premium subsidy over time. Although this reduction in subsidy was drastically needed, the premium effects were unprecedented. Homeowners used to paying $400-$600 found themselves with renewal bills in excess of $3,000 with little understanding why.
During these times there were a few Private Flood Insurance programs available through niche agencies that specialized in flood and property insurance. Due to amazing foresight, they were able to increase capacity for their program so that their product would be available to a greater audience. These pioneers helped to save folks hundreds, and sometimes thousands of dollars off of their NFIP renewal premiums without sacrificing coverage.
After a huge public outcry, the Homeowners Flood Insurance Affordability Act of 2014 was put into place to reduce the shock premium increases experienced by many. Although this slowed the process of increases, it did not stop them. The NFIP has continued to increase premiums, reduce subsidy, and increase policy fees across the Nation.
Private Flood Insurance differs from the NFIP in a few key ways.
- Private Flood Insurance is exactly as it sounds…Private. These policies are written by entities who are concerned with making an underwriting profit. This means that they strive to offer a competitive product, with efficient distribution channels, at prices that encourage you to purchase.
- Private Flood Insurance carriers can selectively underwrite. Unlike the NFIP, private carrier do not have to take every property. They make use of complex underwriting tools to take the properties that are within their risk tolerance. This means that you receive lower rates as your premiums will no longer be subsidizing the properties that have high losses with subsidized rates.
- Private Flood Insurance creates competition. As NFIP rates increase, more carriers will enter the private flood insurance marketplace. Carriers will compete for your premium dollars by adjusting rates and underwriting acceptability.
The National Flood Insurance Program (NFIP) distributes their policies through “Write Your Own” carriers. This essentially means that an insurance carriers can privately label the NFIP policy so it looks like they are the carrier when in fact the are the servicing company. You may see your home insurance company’s name on the flood insurance declarations page, but chances are they are all the same policy from the NFIP.
At the moment, most private flood insurance is written through Lloyd’s of London syndicates although more carriers are entering the marketplace. Wright Flood Insurance who is known for their Write Your Own NFIP platform has recently partnered with 4 carriers who will offer private flood insurance.
What Are Private Flood Insurance Rates
Private Flood Insurance rates vary depending upon several factors. Some of the most important are; flood zone, elevation, foundation type, year of construction, and limit of insurance. There are a few items that can really help you to obtain the lowest private flood insurance rates possible.
- If you have an elevation certificate provide it. If you don; that’s ok, but some private flood carriers do require this.
- Provide accurate information about your property.
- Provide your agent with your current coverage limits if you have a policy in force.
Luckily private flood insurance quotes are easy to request. Only a few pieces of information are needed, and you can save hundreds, and sometimes thousands, of dollars.