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:

National Flood Insurance Program: Most cities and counties participate in the NFIP.

Private Policies: Individual companies can choose to not sell in certain areas.

National Flood Insurance Program: The structure and contents in a structure can be covered under separate policies. Contents coverage can be purchased without having structural coverage.

Private Policies: Generally the same, but need to check with the specific company.

National Flood Insurance Program: Vehicles, items outside the building, detached garages, money, contents in a basement, other items listed in the policy.

Private Policies: Varies by company.

National Flood Insurance Program: Yes, contents coverage is available even if the building is not insured.

Private Policies: Varies by company.

National Flood Insurance Program: No, NFIP insurance is available for all buildings in participating communities.

Private Policies: Individual companies can choose to not sell in certain areas.

National Flood Insurance Program: Yes.

Private Policies: Most do, but check any specific company with the lender.

National Flood Insurance Program: For 1 to 4 family residences: $250,000 for structural coverage, $100,000 for contents coverage. Higher for other buildings.

Private Policies: Varies by company.

National Flood Insurance Program: If required for a loan or mortgage, structural coverage must be at least the balance owed or the maximum structural coverage available, whichever is lower.

Private Policies: The same, unless the company requires a certain minimum amount.

National Flood Insurance Program: Coverage that will replace a damaged item, such as a water heater, with a new one. Without replacement cost coverage, a claim will pay the depreciated value of the item. The NFIP calculates the amount needed for this coverage.

Private Policies: Varies by company.

National Flood Insurance Program: 30 days, unless a policy is needed to close on a loan.

Private Policies: Varies by company but usually less.

National Flood Insurance Program: The cost is set by the NFIP. All agencies must charge the same premiums.

Private Policies: Varies by company.

National Flood Insurance Program: Subject to a max increase of 18% each year (single family owner-occupied homes) or 25% (other properties, including second homes, rentals, and businesses).

Private Policies: Yes.

National Flood Insurance Program: Yes, for limited reasons, such as fraud, lack of payment, duplicate policies, building sold, etc.

Private Policies: Yes. Some companies have not renewed policies after a large claim, but they must follow state cancelation and non renewal requirements .