Flood Insurance Q&A

Why buy flood insurance?

Flooding is a major hazard in the Chehalis Basin and can be very expensive for a flooded property owner or renter. While you may escape injury from a flood, your house or business will still be exposed to water damage. Just an inch of water over the first floor of an average-sized home can cause $25,000 in damage.

Most floods are not big enough to warrant a Federal Disaster Declaration. That means you’re on your own to pay for the clean up and repairs. Unlike other hazards, such as fire and windstorms, flooding is generally not covered by a homeowners’ policy. If you’re concerned about flood damage to your building or contents or your flood insurance premium just went up, take a look at your alternatives.

Flood insurance is your choice, with one exception: Federal law requires a policy if your building secures a loan or mortgage and it’s in the mapped Special Flood Hazard Area. You can check a map at FEMA’s Map Service Center.

What kinds of flood insurance are there?

Flood insurance is easy to get. There are two kinds: a policy backed by the National Flood Insurance Program (NFIP) and a policy managed entirely by a private insurance company, such as Lloyds of London. Both are sold through local property insurance agents, and both must meet certain requirements of the Washington State Insurance Commissioner. Until recently, only NFIP policies were available for homes and renters, but over the last few years, the private industry has come out with more products for residential properties and there are now over 200 companies offering flood policies.

Which is cheaper?

Note that private policies in our area are found to be generally less expensive than an NFIP policy. This is partly because the NFIP has to fund floodplain mapping and other government expenses, and the private policies are freer to cancel or raise the premium if the property proves to be a bad flood risk. In short, private flood insurance companies have more flexibility in rating and non-renewals, while the NFIP is regulated by the federal government.

Which is right for me?

See the next page for a comparison of the two options. Go over these questions with your insurance agent before you decide which kind of flood insurance to buy. Note that you can chose a combination of both NFIP and private insurance. For example, some people want more coverage on their structure than the maximum available under the NFIP ($250,000 for a single-family home). They get an NFIP policy for that much structural coverage and a private policy for the difference (often the private policy has a $250,000 deductible).

Information about NFIP and private insurance coverage is current as of November 2022, but is subject to change over time. No matter which option you chose, review the costs, coverage, and limitations carefully with your insurance agent for the latest information.

Other questions to ask about flood insurance:

Is flood insurance available everywhere?

What is covered?

What is not covered?

Can renters get a policy on their property?

Does the property have to be in or out of a floodplain?

Does a policy meet the requirements for a loan or mortgage on a building in the floodplain?

What’s the maximum coverage available?

How much coverage do I have to buy?

What is replacement cost loss settlement coverage?

Is there a waiting period before coverage is effective?

How much does it cost?

Can premiums be increased?

Can a policy be cancelled?