How do I Choose the Best Home Flood Insurance?

Flood insurance is a special insurance coverage that is separate from your typical homeowner’s insurance policy. It is provided by a limited number of insurance companies, and it comes with its own policy terms and pricing. To choose the best home flood insurance, you should familiarize yourself with the terms and conditions of this special insurance product. It is also important to know from which insurance company to purchase your home flood insurance as well as how much flood insurance you need.

Home flood insurance is not mandatory for every property owner. It typically is only necessary if a person lives in a designated flood zone and has a mortgage. These are areas designated by the government to be close to major rivers, oceans, and other dangerous flooding zones. For individuals living away from rivers and inland from the ocean, home flood insurance is also available but on an optional basis. In these situations, flood insurance can still make sense if your property has a history of flooding from snow melt, from nearby smaller creeks or ponds, or from excessive rainfall.

Whatever the reason for your purchase, home flood insurance policies often can be bought through government agencies, such as the National Flood Insurance Program (NFIP) in the United States, and select other private insurance companies. Private insurance companies that sell home flood insurance often are backed by national governments as well. Still, when purchasing insurance from any private carrier, it is always important to check the financial strength and reputation of the insurance company to be sure the company will be around if you ever have a flood claim.

When it comes to flood insurance cost, the price is based upon how much home flood insurance you buy. There typically are maximum amounts of flood insurance available to replace the structure of a home as well as to replace personal possessions. Pricing is also dependent upon whether you buy replacement cost insurance or actual cash value. Replacement cost insurance will pay a claim to rebuild a home to be similar to what it was before the flood, versus replacing property and possessions minus the value of depreciation, which is what actual cash value insurance does.

One other option to consider when buying home flood insurance is the option of excess insurance. If your possessions and home is worth more than the maximum limits of standard insurance, then you might consider paying for more insurance on top of that, or excess insurance. As with regular flood insurance, it's best to consider the financial rating of whichever insurance company you use for excess coverage as well as the flood insurance rate.