It seems like every April 1st, the National Flood Insurance Program informs us that it is raising the premium rates for flood insurance. (Feel free to insert any April Fools jokes here.)
As of April 1, 2018, the average flood insurance premium rose 8 percent, with some property owners seeing increases of up to 25 percent. Despite what you might initially think, these increases are not the result of Hurricane Irma, but are part of an ongoing effort by Congress to get the National Flood Insurance Program out of debt. As of last count, the NFIP was approximately $25 Billion in debt.
The largest premium increases will be levied upon high-risk properties. This high-risk designation usually applies to buildings that were constructed prior to 1970 when the first flood insurance rate maps were produced, or to newer properties that are either non-primary residential properties, business properties, or properties that sustained substantial damage in the past. The properties deemed “low risk” will most likely see the smallest premium increases – perhaps less than 1 percent.
As a result of these higher premiums, there is a growing number of private insurance companies that are now offering flood insurance policies. Since these policies are not related to the National Flood Insurance Program, these private insurance companies can provide different coverages and higher policy limits than the standard flood policies. Although these private company flood policies may be a good choice for many consumers, you need to be wary as to exactly what you are purchasing, as the terms, conditions, and coverages of such policies vary wildly.
As they say, an ounce of prevention is better than a pound of cure. As high as flood insurance premiums may seem, the protection such policies provide after a catastrophic flood event far outweighs the pain of the monthly premium.
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