Flood Insurance

Why is FEMA flood insurance so expensive?

March 23, 2021

The price of flood insurance through FEMA can be expensive depending various factors such as:

  • What flood-zone is the property located in? Zone X will be much-less expensive compared to Zone A or Zone V.  This information can be found on a flood zone determination.
  • The elevation of a structure in comparison to the elevation of the 100-year flood plain also has an effect on cost.
  • The quality of the Elevation Certificate on file can cause the premium to vary by thousands of dollars.
  • The type of foundation a structure has can also have a significant impact on the pricing of a FEMA flood insurance policy.
  • Is the property eligible for a LOMA (Letter of Map Amendment). A LOMA corrects the FEMA flood map and removes it from the high-risk flood zone which allows the property to be eligible for a Preferred-Risk-Policy which greatly reduces the cost of insurance.

Flood insurance through FEMA or the NFIP is not always the best solution for a property owner, especially if the property is located in a high-risk flood zone such as an A Zone or a V Zone. It is highly recommended that a property owner find out how much flood insurance is through the private flood insurance market and also check eligibility for floodplain removal. The best way to check pricing through the flood insurance markets is through a broker who has access to all the key private carriers and has an efficient way to identify the best solution for each individual property. There is no one size fits all solution for flood insurance.

Why is FEMA flood insurance so expensive?

FEMA flood insurance is written through the NFIP also known as the National Flood Insurance Program. Before the early 1990's the private insurance companies we are fortunate to have access to today were not yet confidently ready to enter the flood insurance market. The government created the National Flood Insurance Program in the 1960's to provide a means of financial protection for property owners since they could not yet get flood insurance through private companies. Since then the NFIP has become what most insurance professionals believe to be the only option for flood insurance. This is a costly misunderstanding. Although that was true before the 90's it is far from the case today. Consumers have a wide variety of lower-cost private flood insurance carriers who now have access to state-of-the-art flood-risk modeling much more competitive pricing than FEMA.

Save money on flood insurance by exploring your options

There are more than a dozen unique private flood insurance carriers that are ready to insure a property. Each of the carriers have different underwriting guidelines and pricing structures. Some of the carries can be accessed directly by the public, some require a broker, and some require a wholesaler. These carriers are backed by some of the strongest financial entities in the world such as Munich Re, Swiss Re, Lloyds of london and so many more.

  1. Get flood insurance quotes from all possible carriers to determine which have the best pricing.
  2. Check to see if you are eligible for a floodplain removal.
  3. Choose a flood insurance specialist who has a deep understanding of not only the private flood insurance market but also the NFIP. Most general insurance agents are unaware of many of these private carriers not to mention the nuances that come with the complex flood market.

What's the best flood insurance company?

Choosing a flood insurance company should be easy but many people find it difficult as the general insurance market seems to be limited on knowledge related to buying flood insurance. Many agents will be lucky to only experience even a few flood insurance policies and it's the reason most just aren't familiar with servicing this market. It's like going to a general practice doctor for something that requires a specialist. They will usually refer you to a specialist who specifically has a depth of knowledge and experience relating to the need. Unfortunately, many agents either don't refer the business out and just prescribe an expensive FEMA flood insurance policy to a client or they send the client out on a wild goose chase right back to the same market they came from. There are a handful of flood insurance specialists out there but even they often lack critical knowledge and resources. A property owner really needs an agent who has access to at least a dozen carriers and will take the time to quote every single one. The quoting also needs to be done correctly. We often find policies with numerous errors on them from inexperienced brokers who aren't used to using the platform making it easy for them to make mistakes. Mistakes can leave a property owner massively exposed to financial loss and can trigger increases in costs. Bottom-line, flood insurance calls for an expert who is constantly engaged in writing flood insurance and evaluating options for property owners who have flood risk exposures.

“Bottom-line, flood insurance calls for an expert...”

How do you know if you are working with a competent flood expert?

You will notice that their business is solely focused on flood insurance and the results speak for themselves.

  • Put them to the test and get a flood quote. Agents with access to more carriers will have a much larger variety of options and will often provide their customers pricing options that are thousands of dollars less.
  • Do the agents understand how floodplain removal works and was the option explored or presented? If not, that's a red flag.
  • When you have a conversation with a flood expert over the phone you will notice they have a certain level of confidence and a wealth of understanding that should make you feel at ease.

Get in touch with a flood insurance specialist at Yep Insurance today.

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