Until 2014, private flood insurance was extremely rare. It's impossible to tell how reliable private coverage will be when it comes to paying out damages and handling claims should a natural disaster, such as a hurricane hit their policyholders. The biggest risk in getting private flood insurance is that the companies offering it are largely untested by major disasters. Disadvantages: private flood insurers are new and untested The best course of action is to shop around and compare quotes from both federal and private flood insurers. The same study found some homeowners’ policies could cost twice as much as those from the NFIP. However, prices vary greatly and not all homeowners will pay less by opting for private insurance. The same is true for 69% of households in Louisiana, and 92% of those in Texas. According to a paper by Milliman, an actuarial and management consulting company, 77% of single-family homes in Florida could see cheaper premiums with private insurance. Private insurers may be less expensive for many homeowners. This type of coverage is typical of regular homeowners insurance policies but is not included in flood insurance sold by the federal government. Private flood insurance can also pay for living expenses in the event your home becomes uninhabitable. Because the NFIP follows a much stricter standard policy, such customization is not available with federal flood insurance. Additionally, a private company may be able to rearrange these limits to closely match what you have in your home. A private flood insurer will be able to cover each of these items separately, up to much higher limits. The NFIP lumps all these items into a single category, and only pays you up to $2,500 in damages. This is useful if you have furs, jewelry, fine art or collectibles that could be damaged by floodwaters. Therefore, if you need to maximize your coverage, private insurers are the only way to go.Īnother key advantage of private flood insurers is that they provide coverage for a greater number of possessions. In many cases, private insurers can provide you with twice that or more that level of coverage - especially if your property is located in an area with lower flood risk. Policies provided by the NFIP typically have a maximum coverage of $250,000 for the structure of your home and $100,000 for your possessions. Private flood insurers can offer consumers higher coverage, which is important to homes valued above $350,000. Must meet certain requirements to be accepted by some lenders.Īdvantages: private flood insurance is customizable and often cheaper
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