THURSDAY, FEBRUARY 25, 2021
Flood coverage can be a complicated issue that many homeowners aren’t educated on, until it’s too late. Some may assume that their homeowners insurance policy will cover the losses caused by a flood, while others may assume that the National Flood Insurance Program will provide enough coverage in the event of a loss. Unfortunately, that’s not always the case, which is where excess flood coverage comes in handy. Read on to learn more. 
How Does Excess Flood Coverage Work?
The terms of an excess flood policy usually match the ones found in your NFIP policy. However, rates and coverage options will vary between different insurers. While the NFIP determines rates based on the average loss in a particular flood zone, the private insurers that provide excess coverage look at a number of other factors, including the following:
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The foundation structure (e.g., basement, crawl space or slab)
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The direction your home faces
Excess flood policies typically don’t have a deductible, since they’re only triggered when a loss exceeds the limits of your NFIP policy. And, while excess insurance will cover the same losses as the regular flood policy, some insurers may add extra coverage options:
Who Needs Excess Flood Coverage?
The two biggest factors when considering excess flood coverage for your home are the property value and the mortgage company you use to secure a loan. If you use a federally backed mortgage program, you may have to purchase an NFIP policy, especially if you live in an area at high risk of flooding. However, if it would cost more than the $250,000 NFIP coverage limit to rebuild your home after a flood, you should also consider buying an excess flood policy. Because flood damage can also put the lender you use to secure a home mortgage at risk, you may also be required to secure excess coverage before you buy a home.
Lenders may also require you to carry flood insurance that covers one of these three amounts:
Keep in mind that even if you aren’t required to buy excess coverage, these policies can give you the funds you need to rebuild or replace your home after a flood.
Choosing the Best Coverage Option
Floods are one of the most common and costliest home hazards, as even minor water damage can destroy a property. If you live in a flood-prone area, purchasing excess flood coverage may make the world of a difference for you in the event of a disaster. Don’t wait until it’s too late.
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