The federal government's flood insurance program is deep in debt, and the financial burden is flowing to its policyholders. Consumers in coastal areas who feel they're getting soaked by surging premiums are anxiously searching for relief. And some are finding that less expensive private flood insurance options may be available.
The government's National Flood Insurance Program, or NFIP, is administered by FEMA, the Federal Emergency Management Agency. NFIP offers coverage that protects property owners from damage caused by rising water -- a hazard not covered by a standard home insurance policy.
Homeowners in high-risk flood zones have been trying to keep their heads above hefty flood insurance rate hikes that took effect in 2013.
The reform law brought increases in premiums of as much as tenfold -- or worse.
Other options for flood insurance
Private companies that provide flood insurance are few and far between, and their premiums may not be considered affordable when compared with the federal flood coverage.
This goes back to why the federal flood insurance program was created: Many private insurance companies stopped offering coverage for flooding following massive and expensive floods.
A study was conducted in 2011 that found that for private insurers to offer flood insurance, they would have to charge two to three times what the government charges. So….
Big insurance name wades in
Lloyd's of London, the insurance giant based in the United Kingdom, also underwrites flood policies, through another Florida-based company called The Flood Insurance Agency. The coverage is available in more than 20 states, including Massacusetts.
While most people can sustain a partial loss to their property, if their home is indeed washed away, then they have nothing left. Flood insurance is certainly important for those in flood zones. However, if it rains where you own a home, your home can flood. Contact Lallis & Higgins for more information.
Excerpts - bankrate.com