How Much Does Flood Insurance Cover?
Most flood insurance in the U.S. is obtained through the National Flood Insurance Progam. Banks are required to ensure that mortgage holders in high-risk areas have flood insurance. The NFIP offers maximum coverage of $250,000 for a building and $100,000 for its contents. There are policies on the private market that cover more, and homeowners can also buy less coverage.
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Private Insurance More Expensive
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NFIP insurance is subsidized by the federal government, and the policies it offers are often less expensive than what is offered on the private market. According to the Government Accountability Office, a NFIP policy that costs $500 annually would cost $900 on the private market, and that is just to cover the building. To cover the contents, a policy that costs $350 through NFIP would cost $600 on the private market.
Government Market Share
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According to the Government Accountability Office, private insurers have written somewhere between 180,000 to 260,000 policies, compared with more than 5 million NFIP policies. But many of those private policies are so-called gap policies. They do not kick in until insurance from the National Flood Insurance program is maxed out. In many cases, the NFIP policy will also cover the deductible for the private policy.
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Maximum Rates
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For homeowners in low or moderate-risk areas, the maximum amount of insurance through NFIP---$250,000 for a building, $100,000 for contents---may cost about $405. For homeowners in high-risk areas, the maximum amount of coverage may cost about $2,734, according to Floodsmart.gov. For residents of coastal areas however, that cost may rise to $5,903. Homeowners don't have to cover the contents of their building. Insuring a building for $250,000 in a high-risk area would cost about $1,691.
Less Expensive Coverage
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The NFIP also offers coverage for renters. The may purchase insurance to cover just their possessions, and policy rates in low risk areas may cost about $238 annually for $100,000 of property. A high-risk policy for $150,000 for a building and $30,000 in contents may cost about $1,760.
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References
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