How NFIP Flood Insurance Differs From Excess Flood Insurance
If you want to purchase a home in a flood-prone area, you need flood insurance coverage. This insurance cover protects you during floods and the person who will provide your mortgage. Here are some distinctions between NFIP insurance and excess flood insurance.
What Are the Requirements for Flood Insurance?
Flood insurance applies to homeowners living in flood-hazard areas. Basic flood insurance covers the cost of rebuilding your home, the remaining mortgage, and the NFIP insurance coverage limit of $250,000.
On the other hand, excess flood insurance applies to you if your mortgage is above $250,000. In this case, your lender has to buy coverage beyond the NFIP maximum. Another notable difference between NFIP flood insurance and excess flood insurance is that the latter isn't compulsory.
However, if you live in a region with a high risk for flooding, you should consider excess flood insurance. This is because a flood may destroy your house, and the $250,000 may not be sufficient to cover rebuilding or repair costs.
What Are the Features of Excess Flood Insurance?
An excess flood insurance policy covers everything that is included in the NFIP. While the coverage of excess flood insurance varies depending on the insurance provider, many standard procedures provide the following:
- More than $250,000 coverage to rebuild or repair your house after a flood
- Coverage for personal property replacement valued over the limits provided by an NFIP policy
- Money for additional expenses as you wait for your home to be rebuilt or repaired
How Are the Rates of Excess Flood Insurance Determined?
The cost of excess flood insurance varies depending on several factors. Generally, insurance providers consider how flood-risk-prone your house is when setting the cost of your premiums.
First, insurance companies will consider the location of your home and its condition. Another factor the insurer will look at is the elevation of your home or what floor your condo is on. Other factors include the distance from your home to a water source, whether your house is facing the water source, and the amount of coverage you want to buy.
For example, old homes located in high-risk flood zones attract high premiums. Additionally, expect to pay high premiums if your home is facing or close to a water source.
Excess flood home insurance can prove worthwhile if you live in a high flood-risk zone. When shopping for excess flood insurance, compare quotes from different insurers. You should also research and seek advice on the most appropriate coverage and deductibles.