The meeting covered a detailed comparison between the National Flood Insurance Program (NFIP) and private flood insurance options, focusing on five key aspects: coverage, pricing, availability, waiting periods, and claims.
Attendees included Chris Green (presenter), with the information aimed at homeowners, investors, and commercial property owners.
Key decisions revolved around evaluating insurance types based on personal needs, regional factors, and policy specifics.
Additional resources and downloadable guides were mentioned for further learning.
Action Items
Chris Green: Provide downloadable resources referenced in the meeting (e.g., "five things to know before purchasing flood insurance").
Chris Green: Update website with flood risk score tool and recent coverage/pricing examples.
All attendees: Review current flood insurance policies for coverage clarity, deductibles, and exclusions.
All attendees: Consult insurance agents to compare rate trends and future projections for both NFIP and private options.
Coverage Differences: NFIP vs. Private Flood Insurance
NFIP offers building coverage up to $250,000 and contents up to $100,000 for residential properties. Coverage requires insuring to the maximum limit or 80% of replacement cost, whichever is less.
NFIP does not offer replacement cost on contents, only actual cash value; failure to meet coverage requirements results in actual cash value payout.
Private flood insurance can offer higher limits, true replacement cost on contents, and additional coverages like loss of use/additional living expenses, which NFIP does not include.
Deductibles apply separately to each coverage type; large deductibles across multiple coverages could significantly increase out-of-pocket costs.
Pricing and Rate Determination
NFIP rates are determined by replacement cost, distance to water, elevation, flood frequency, and flood type; as of 2023, flood zones are used for regulatory purposes, not pricing.
NFIP rates can fluctuate with changing flood risk; buyers should consider long-term premium projections.
Private insurers may still factor flood zones, but also use replacement cost, distance to water, flooding history, and flood risk scores. Previous flood claims can disqualify properties from private coverage.
Private flood insurance may be up to 40% less expensive in some cases, but exclusions and definitions must be carefully reviewed.
Availability and Restrictions
NFIP is not available in nonparticipating communities (often rural or with mitigation violations) or certain coastal barrier areas.
Private insurance generally has broader availability but may have more restrictive underwriting based on claim history and risk modeling.
Regulatory and disaster assistance implications arise for properties in nonparticipating areas.
Waiting Periods
NFIP waiting periods: none for loan closings, 1 day for new high-risk zone mapping, 30 days for cash purchases or non-loan transaction investors.
Private waiting periods: none for loan closings; standard waiting period varies by insurer (typically 2–15 days, rarely 30 days).
Claims Process
NFIP allows appeals up to 60 days and has a structured, documentation-heavy claims process.
Private flood insurance claims are typically handled faster, with less bureaucracy but may lack formal appeals due to nonadmitted policy status.
Policyholders should document all damage thoroughly regardless of provider.
Evaluating Best Fit and Considerations
Choice depends on preference for government-backed (NFIP) vs. private company-backed policies, local market stability, and tolerance for premium volatility.
Regional factors (e.g., Florida, Louisiana, Myrtle Beach) may influence suitability due to market conditions.
Policy definitions and exclusions, especially regarding what constitutes a "flood," are critical to understand before purchasing.
Buyers should ask insurers about historical rate changes, future premium projections, and specific policy limitations.
Decisions
Comparison of NFIP vs. Private Flood Insurance Required Before Purchase — Attendees were advised to thoroughly evaluate policy terms, exclusions, and financial stability of providers to determine the best insurance solution for their needs.
Emphasis on Understanding Policy Definitions and Exclusions — Rationale: To avoid denied claims due to non-qualifying flood events or policy misunderstandings.
Open Questions / Follow-Ups
What are the specific exclusions and flood definitions in leading private flood insurance policies currently available in each attendee's state?
How do projected NFIP rate increases apply to attendees’ properties over the next five years?
Clarification requested on additional living expense limits and eligibility in private policies.
Timeline for the availability of new downloadable resources mentioned by Chris Green.