Types of flood insurance
Previously, the only way to purchase flood insurance was from the NFIP. However, in the last several years, some private carriers have started to offer flood insurance.
When it comes to private flood insurance vs. NFIP coverage, understanding the differences between the programs could help you determine the best flood insurance companies to request quotes from.
National Flood Insurance Program (NFIP)
The National Flood Insurance Program gives homeowners access to federally supported flood insurance. NFIP insurance is available to any homeowner, regardless of flood risk, and offers up to $250,000 in building coverage and $100,000 in contents coverage.
If you own a business, you can purchase an NFIP commercial policy with up to $500,000 in building coverage and up to $500,000 for contents. For both residential and commercial flood policies, these coverage types generally have separate deductibles and may need to be purchased separately.
Flood policies may be issued directly by the NFIP or by various insurance companies through an NFIP program called write your own (WYO) policy. With the WYO program, the insurance company issues and services the policy. However, the NFIP is responsible for paying any approved claims related to the policy.
Private flood insurance
Private flood insurance also covers the structure of your home and its contents from flood damage, except it receives no support from the federal government. Instead, private flood insurers are companies that either rely on a reinsurer or money collected from premiums to cover losses.
Private flood insurance policies can be more robust than NFIP policies, and you might have access to more coverage options and higher policy limits than you do with federally underwritten policies. Additionally, waiting times for private flood insurance might be shorter than the 30-day period NFIP requires.
Source: thesimpledollar.com