While insurance companies have traditionally provided flood insurance via the National Flood Insurance Program (NFIP), more and more companies are now offering private flood insurance in addition to the NFIP plan.
Here's what you need to know about the two main options for flood insurance and why a private flood insurance policy may be the smarter purchase in 2023.
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What's the difference between the NFIP and private flood insurance?
Because flood damage isn't covered by standard home insurance policies and few private companies wanted to take on the risk at the time, the Federal Emergency Management Agency (FEMA) set up the NFIP in the late 1960s to fill this massive coverage gap.
While the NFIP has done it's intended job for the most part, a combination of worsening floods, outdated flood maps, poor risk management, and a lack of adequate funding have increased the program's debt to over $20 billion [1] .
Meanwhile, more and more companies are beginning to offer their own private flood insurance thanks to recent technological breakthroughs that helps them more accurately predict and price flood risk to individual homes.
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Here's a quick breakdown of the NFIP and private market flood insurance.
National Flood Insurance Program: NFIP flood insurance is funded by FEMA, but the policies themselves are written and sold by private insurers in the NFIP's participating communities through its Write Your Own (WYO) program. With participating communities in nearly every corner of the country and the private flood insurance market still in its infancy, the NFIP still accounts for the vast majority of residential flood policies in the U.S. [2] .
Private flood insurance: Private market flood insurance policies are written and backed by private insurance carriers. While private flood insurance only makes up a tiny fraction of the market, it’s become an increasingly popular alternative to the NFIP.
While private companies technically write and manage NFIP flood insurance policies, they're only able to write a limited amount of coverage — like a maximum of $250,000 in building coverage for your home and $100,000 in personal property coverage for your belongings — due to the program's strict underwriting rules.
Private flood insurance, on the other hand, offers higher limits of protection and additional coverages not offered under the NFIP plan.
Compare NFIP and private flood insurance quotes
Private flood insurance
Private flood insurance covers your home and belongings from damage caused by natural flooding. But what makes it different from NFIP flood insurance is that policies aren’t backed by the federal government. The insurance company is responsible for managing its own risk and paying out claims.
While it only accounts for around 5% of the residential flood insurance market, the number of people turning to private flood insurance instead of the government program appears to be on the upswing. In fact, private flood insurance premiums grew 71% from 2016 to 2018, and 15 states experienced over 100% growth in premiums during that span. [3]
The best private flood insurance companies of 2023
Our picks for the best private flood insurance companies offer a mix of affordable rates, flexible policy options and coverage limits, high financial strength ratings, and industry-best customer service.
Neptune: As a private flood insurance marketplace, Neptune is our top pick overall thanks to the comprehensive coverages offered by the large mix of carriers it partners with. Through Neptune, you have access to up to $4 million in building coverage, up to $500,000 in personal property coverage, and up to $10,000 in coverage for belongings stored in your basement — rare among flood insurance companies.
Wright: Boasting the cheapest rates of all of the major flood insurance companies we looked at, Wright is a great choice for affordable coverage if you live in one of the 40 states it works in. Depending on the insurer you're connected with, you may be able to get up to $1.25 million in building coverage and $875,000 in personal property coverage.
Kin: This relatively new insurance company with innovative underwriting and risk modeling technology is our top pick for Florida and Louisiana homeowners looking to roll their home insurance and flood coverage in one. It offers a private flood insurance endorsement you can add on to your standard home insurance policy for an additional premium to save you both time and money.
Chubb: Our top pick for private flood insurance for high-value homes, Chubb flood policies include up to $15 million in building and personal property coverage, as well as up to $15,000 in coverage for belongings stored in your basement. Your home needs to be valued at more than $1 million to qualify for coverage, however, and it only works with homeowners in 41 states and Washington, D.C.
Palomar: If you're looking for additional flood insurance coverage to supplement your NFIP policy, Palomar is our top pick. The insurer offers up to $5 million in building coverage and $1 million in personal property coverage for homeowners who need an extra bit of coverage on top of their existing NFIP policy. However, you'll need to live in one of the 18 states it works in to qualify.
Learn more >> Best flood insurance companies of 2023
National Flood Insurance Program
The NFIP was established by the federal government to provide flood insurance and establish floodplain standards in communities across the country. Today, around 90% of residential flood insurance in the U.S. is provided by the NFIP.
FEMA flood insurance includes two types of coverage: building property and personal property coverage. Each coverage comes with its own separate out-of-pocket flood insurance deductible that you're required to pay before the NFIP will reimburse you for a building property or personal property claim.
Building property coverage: Pays to repair flood damage to your home or garage. The maximum building coverage limits for residential property is $250,000, which is often too low for more expensive homes.
Personal property coverage: Pays to repair or replace flood-damaged furniture, electronics, appliances, and other stuff you own. The maximum personal property coverage limit is $100,000.
Until recently, if you had a federally-backed mortgage and you lived in a high-risk flood zone, your mortgage company could require you to buy flood insurance exclusively through the NFIP. But as of July 1, 2019, lenders are required to accept private flood insurance as long as the policy includes at least the same quality coverage as the NFIP option.
Learn more >> How much flood insurance do you need?
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Private flood insurance vs. NFIP: Which is better?
Since private flood insurance isn’t subject to the same restrictions and regulations as government flood coverage, insurers are able to offer coverage options not available through the NFIP. This includes payments for temporary living expenses — like hotel stays and restaurant meals — and coverage for personal belongings in your basement.
Private flood insurance also often offers higher protection limits for your home and belongings, and policy enhancements like replacement cost personal property coverage, limiting your out-of-pocket expenses after a flood loss.
NFIP | Private flood insurance | |
|---|---|---|
Maximum home rebuild limit | $250,000 | Typically up to $500,000 or higher |
Availability | Participating communities in all 50 states | May be limited in higher-risk areas |
Waiting period | 30 days | As little as two weeks |
Accepted by mortgage lenders | Yes | Yes |
Replacement cost building coverage | Yes | Yes |
Replacement cost contents coverage | No | Yes |
Loss of use coverage | No | Yes |
Loss avoidance coverage (sandbags, etc) | No | Yes |
Debris removal coverage | Yes | Yes |
Additionally, private flood insurance has a shorter waiting period, which is the amount of time it takes for your policy to take effect after you’re approved for coverage. This makes it a preferred option during hurricane season for residents who need coverage right away.
But there is a downside to private flood insurance as well: Your policy can be canceled or nonrenewed if your insurer thinks your home is too high risk. With the NFIP, you generally don’t have to worry about losing your flood insurance coverage.
But if you're in search of cheaper or better flood insurance, it may be worth turning to private flood insurance instead. In fact, a 2017 study by Milliman found that 77% of single-family homes in Florida, 69% in Louisiana, and 92% in Texas could all see cheaper premiums with private flood insurance. [4]
Find the average cost of flood insurance in your state in 2023
Compare private flood insurance & NFIP rates
The average annual cost of NFIP flood insurance is $939 per year, while private flood insurance costs around $1,074 per year, according to our 2023 analysis of flood insurance pricing data from FEMA and the National Association of Insurance Commissioners. [5] [6] But your own rates will vary depending on factors like your home's flood zone, elevation, and how much flood insurance you need.
Here's the average annual cost of private flood insurance in each state and the percentage difference compared to its average NFIP flood insurance premium.
State | Average annual cost | Difference from NFIP average (%) |
|---|---|---|
Alabama | $821 | -17% |
Alaska | $1,281 | 71% |
Arizona | $505 | -41% |
Arkansas | $573 | -37% |
California | $850 | -1% |
Colorado | $909 | -4% |
Connecticut | $1,515 | -3% |
Delaware | $1,364 | 27% |
District of Columbia | $475 | -34% |
Florida | $1,439 | 49% |
Georgia | $1,066 | 25% |
Hawaii | $1,945 | 39% |
Idaho | $1,030 | 17% |
Illinois | $683 | -33% |
Indiana | $853 | -14% |
Iowa | $653 | -20% |
Kansas | $583 | -32% |
Kentucky | $690 | -35% |
Louisiana | $1,222 | 43% |
Maine | $1,356 | 26% |
Maryland | $770 | -10% |
Massachusetts | $1,454 | 3% |
Michigan | $787 | -11% |
Minnesota | $689 | -16% |
Mississippi | $731 | -17% |
Missouri | $606 | -40% |
Montana | $870 | -5% |
Nebraska | $799 | -14% |
Nevada | $517 | -36% |
New Hampshire | $1,232 | 21% |
New Jersey | $1,159 | -4% |
New Mexico | $654 | -31% |
New York | $1,420 | 9% |
North Carolina | $888 | -4% |
North Dakota | $589 | -27% |
Ohio | $704 | -25% |
Oklahoma | $639 | -29% |
Oregon | $751 | -18% |
Pennsylvania | $934 | -9% |
Rhode Island | $1,538 | 19% |
South Carolina | $1,126 | 32% |
South Dakota | $693 | -25% |
Tennessee | $632 | -28% |
Texas | $730 | -13% |
Utah | $501 | -30% |
Vermont | $1,568 | 48% |
Virginia | $885 | -2% |
Washington | $842 | -9% |
West Virginia | $819 | -21% |
Wisconsin | $753 | -13% |
Wyoming | $1,221 | 41% |
Learn more >> What is the average cost of flood insurance?
Compare NFIP and private flood insurance rates today
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Frequently asked questions
Is private flood insurance better than NFIP?
Private flood insurance is better than NFIP coverage in that it offers more robust coverage, higher coverage limits, and a shorter waiting period for your policy to take effect. But it may be hard to find coverage through a private insurer if you live in a high-risk flood zone, which is when you might want to consider NFIP coverage that's available nationwide.
How can you get private flood insurance?
You can buy private flood insurance by reaching out to an insurance company that offers flood coverage. But an easier option is to use an insurance marketplace like Policygenius. Our team of licensed insurance agents can help you find a private flood insurance policy that meets your needs and ensures your home is fully protected. Even better, we'll give you quotes from multiple companies so you can rest easy knowing you got the best deal possible at the lowest price. You can learn more with our guide to buying flood insurance.
Who is eligible for private flood insurance?
Anyone is eligible for private flood insurance. That being said, it might be harder to find coverage if you live in a high-risk flood zone since private insurance companies might not want to take on the risk. If that's the case, consider purchasing a policy through the NFIP. While they have lower coverage limits, they write policies nationwide for homes in all types of flood zones.
Can you get private flood insurance in Florida?
Several insurance carriers in Florida now offer their own private flood insurance coverage, including Neptune, Kin, Typ Tap, and other reputable companies. Here's more information about private flood insurance in Florida.
Can you get private flood insurance in Texas?
There are now several insurance carriers that write private flood insurance coverage in Texas with up to $1 million in building coverage, replacement cost personal property coverage, and numerous deductible options to keep costs down. This includes Neptune, TypTap, Wright Flood, and several other insurers.
