The Flood Insurance Guru Blog
Hello Chris Greene here with Flood Insurance Guru. Today, we're talking about, what is private flood insurance? If you've watched some of our other videos, then you've seen where we've discussed some of the differences between the National Flood Insurance Program, also known as NFIP, which is falling under FEMA but today, we want to talk about exactly what is private flood insurance? Maybe, how can you benefit? and what are some of the unique coverages? Those are some things we want to discuss today. This way you know about all the flood insurance options.
First of all, let's talk about, what is private flood insurance? Private flood insurance is basically like it sounds. Private flood insurance is insurance through the flood market benefits offered by private insurance carriers. Now, there's two main backers of this, that probably insure 95% of the private market, and that's Lexington and Lloyd's of London.
Lloyd's of London is basically a group of investors out of London. They insure a lot of the high-risk stuff in the insurance market today that other companies aren't willing to take the chance on. They're also referred to as a surplus market, because they have some different guidelines they go by. Because many times they're not registered by the local states, so many of those times they don't have to carry certain reserves. They don't have to follow certain rules, because they are not registered with each individual state. Now when claims are paid out, they could move out of that state without paying for those claims, so that is something to consider. However, generally, that's never really happened but they do have to disclaim this with being a surplus company.
Let's talk about the private market a little bit, as well. Outside of Lexington and Lloyd's, you've got very few insurance companies out there that will go into the private market on their own without other backers. Now, some of the benefits of private flood is, they offer some pretty unique coverages. Like, more than $250,000 on residential buildings, more than $100,000 on content coverage, replacement costs for personal property, and additional living expenses,. So if your house floods you might have those additional living expenses covered for, let's say six months.
Now, one of the things that we hear a lot here at the Flood Insurance Guru is, "Hey. I've got a private flood insurance quote, but I was declined because I've had a claim. So, I can't get private flood insurance." This just simply isn't the case. A lot of what this is, is just misinformation out there.
Yes, there are a lot of private flood insurance companies that will not insure properties that have had a flood loss but there are also some companies that will. Now, most of the guidelines with some of these companies is that there hasn't been more than one flood loss within the last five years that's exceeded $250,000. That is the max that's offered through the National Flood Insurance Program on residential. Basically, what they're looking for there is to make sure there's no total loss.
Now, in the private market, while they will insure properties that have had a loss. Generally, they're going to surcharge for it. They're going to charge you a little bit more money on top. To give you an example might be 10-20% more because the property had a flood loss. The reason for that is, properties that have incurred a flood loss generally are more likely to incur another one in the future. These are some unique coverages when it comes to private flood insurance.
What exactly is private flood are some of the things that we've discussed a little bit? If you've got questions about, maybe, is private flood insurance right for you? or you want to get a better understanding of what exactly it is, maybe, compared to the National Flood Insurance Program then click the link below or visit our website Flood Insurance Guru Go to our YouTube and our Facebook channels where we do daily videos on flood education and different flood topics. You can also give us a call, 205-451-4294.