Over the past two weeks, I’ve written about flood insurance. I wanted to wrap up this theme and address one of the limitations of a standard, government backed flood policy and that is the policy’s limits. Limits are present on all forms of insurance including home, car, jewelry, commercial, and even flood. When I refer to a policy’s limits, I’m referring to the maximum amount of coverage available on the policy for a specific item. The question we’ll answer in this post is how to obtain coverage beyond a standard flood insurance policy’s limits.
The maximum amount of coverage on a standard flood policy written through the National Flood Insurance Program (NFIP) and administered by the Federal Emergency Management Agency (FEMA) is $250,000 on the home, or dwelling, and $100,000 on contents, or personal property. The amount of insurance should be enough to cover demolition (either partial or total), debris removal, and rebuilding the home on a replacement cost basis. Zillow shows the average value of a home in Texas is $184,000 while the average price for homes listed for sale in May of this year is $276,990. For too many people, a standard flood policy may not provide enough coverage to rebuild their home.
Excess flood insurance is an additional policy that provides coverage on a home above the home and contents limits of a standard flood policy. Excess flood policies provide coverage starting at $250,001 for a home or condo and $100,001 for contents. This type of policy enables the home or condo owner to have enough coverage to rebuild and refurnish their home without having to obtain a loan to do so. These policies are not written through NFIP or FEMA, but through an insurance company which underwrites these policies.
Not everyone needs excess flood insurance coverage, but if you own a higher value home that is in an area where a catastrophic flood or tidal surge could occur, then you should consider getting this. One only must look back at the 20-foot storm surge from Hurricane Ike, the flooding from Hurricane Harvey, and the flooding along the Blanco, San Marcos, Guadalupe, San Antonio, Brazos, Trinity, Colorado, and Red Rivers to see no one is immune to such losses.
The cost for excess flood insurance varies by carrier, amount of coverage, and deductible, however, it is much less than being on the hook for anything more than $250,000 if you don’t have this coverage. What do you think? Share your questions, comments, or experiences with me on our Facebook, Google +, and LinkedIn pages. I’d love to hear from you!