The 8 Best Flood Insurance Companies of 2020 - Investopedia

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What Is Flood Insurance?

Flood insurance covers the harm caused by heavy or prolonged rain, melting snow, coastal storm surges, blocked storm drainage systems, or levee dam failure. Some policies cover only the structure of the home, while some cover the inside contents of the property such as electrical installations, cooling and heating systems, appliances, and more.

The NFIP excludes temporary housing and additional living expenses incurred while the building is being repaired or is unable to be occupied. Property outside of an insured building (landscaping, wells, septic systems, decks and patios, fences, seawalls, hot tubs, and swimming pools) are not covered either. Financial losses caused by business interruption are generally not covered by the NFIP, nor are losses of currency, precious metals, stock certificates and other valuable papers, cars and most self-propelled vehicles (including their parts), and personal property kept in basements. Some private insurers stand out by covering some of the items NFIP doesn’t.

What’s the Difference Between Private Flood Insurance and NFIP?

NFIP’s policies are regulated by the federal government. While NFIP has been the most common flood insurance for decades, with the appearance of private flood insurers, the market has become a bit more competitive. Private flood insurance carriers are independent and have their own reinsurance programs. They don’t have to abide by the requirements set by FEMA for the policies that are written through the NFIP.

Because they have a direct interest in the claims, private insurance companies analyze each property individually and generate premiums that reflect the flooding risk more accurately for each property. This allows consumers to find flood insurance that offers the best rate for their situation. 

Who Should Get Flood Insurance?

While flood insurance is typically recommended for those who live in areas under risk of flood damage, that doesn’t mean that other homeowners shouldn’t get this coverage as well. More than 25% of flood claims come from properties outside of high flood areas, according to The Federal Emergency Management Agency. Furthermore, it only takes a few inches of floodwater in your home to cause an average of $35,000 in damage.

If you live in an area under risk of hurricane, storm, prolonged rainfall or snowfall, coastal storm surge, or other conditions that may increase the risk of flooding, flood insurance is a must. However, if you live in a low-risk area where there are no snowfalls, rainfalls, or other conditions that raise the risk of flooding, investing in flood insurance is not a must-have for you. 

How We Chose the Best Flood Insurance Companies

To find the best flood insurance providers, we analyzed 16 companies to determine the best options in eight categories. We started with company history, financial and customer service ratings, and overall reputation. We looked at what types of flood insurance they offer, and for which situations they may be a particularly good fit. Online quoting and claims filing were a plus, but needed to be balanced with the option to dial up a live person.

We strongly preferred companies that write policies nationwide. Companies that fared well in our price comparisons rose to the top also. Finally, we pointed out any notable inclusions or exclusions that were different from other carriers.

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The 8 Best Flood Insurance Companies of 2020 - Investopedia
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