The flood insurance marketplace is tightly regulated by the U.S. government. Therefore, the limits provided by the standard policy are quite stringent. While policies can cover a high amount of the value of someone’s property, yours won’t pay more than its limits. That could be a significant problem when it comes to insuring a high-value property. The question is, is there any way that you can increase your limits for further assistance.
If you have a home worth significant value, talk to your insurance agent. They can help you decide the appropriate steps to take to protect the home from the effects of flooding.
The Limits of Flood Insurance
Most standard homeowners insurance policies don’t cover flooding when it arises after a river swell, a flash flood or storm surge—in other words, weather-related floods. To get such protection, property owners will need to buy flood insurance. But, the thing about flood insurance is that it’s not quite as straightforward to enroll in and adjust as other types of property insurance.
Flood insurance in the United States primarily comes from the National Flood Insurance Program (NFIP). This is a government-backed program, and only people who live in communities that participate in the program can qualify for a policy.
Policies also include numerous limits on the coverage they will provide. Residential policy limits on an NFIP policy are:
- $250,000 for the structure of the home
- $100,000 for possessions on the property
So, that means you can buy up to $250,000 coverage for the structure, and $100,000 for your possessions. However, you can choose other policy limits. For example, if your home is only worth $125,000, and your possessions are worth only $75,000, then you can buy these limits. It’s always best that you choose as much coverage as necessary to reflect the full value of your property and possessions. Otherwise, you might not be able to receive enough money from a claim.
However, what happens if your home and possessions are worth more than the maximum $250K/100K limits of a homeowners policy. Even if you buy the maximum available coverage, that might mean you still can’t cover all of your possessions and your property simply because they are worth so much.
In these cases, you might have to inquire about whether you can purchase a private flood insurance policy for your property instead. Often, these policies can include much higher limits than the standard NFIP policy. These policies aren’t available for all properties in all areas. However, if you are planning to build a valuable property in a flood-prone area, speak to your insurance provider. They can point you in the correct direction to find the appropriate policy.