Here's what you should know about private flood insurance, as well as a few companies to look into.

But first, some terminology: NFIP policies are sold by companies like Allstate and Farmers. When we talk about "private flood insurance," we're talking about policies that aren't underwritten by the federal government and don't have the same restrictions.

Private flood insurance vs. NFIP

Private flood insurance is a small but growing part of the flood insurance landscape in the United States. According to Federal Emergency Management Agency data, total NFIP premiums totaled more than $3.5 billion in fiscal year 2021.

According to the Insurance Information Institute, private flood insurers accounted for only $302 million in premiums in 2020, the most recent year for which data is available.

However, the NFIP's massive market share does not imply that it is the best option for everyone. For example, the program's coverage limits for the structure of your home are $250,000 and $100,000 for your belongings. If you have a large home or expensive belongings, these amounts may not be sufficient.

Compare those limits to those provided by a private insurer such as Neptune, which will cover your home up to $4 million and your belongings up to $500,000.

An NFIP policy will not cover the cost of repairing a damaged swimming pool or replacing items stored in your basement, nor will it cover the cost of living in a hotel or rental while your home is being repaired following a flood. However, private flood insurance companies may offer this type of coverage.

Surplus lines carriers underwrite some private flood insurance policies. These are insurance companies that provide coverage for things that standard insurers do not. Surplus line carriers are regulated and monitored to ensure their financial viability.

Surplus lines carriers, on the other hand, are not required to contribute to a state's guaranty fund in the same way that standard, or "admitted," insurance companies are. If an admitted insurance company goes out of business, a guaranty fund will pay policyholder claims. You will not have the same protection if you are insured by a surplus lines carrier that fails.

Still not sure if private flood insurance is for you? Consider the following advantages and disadvantages.

Pros of private flood insurance

• Private company policies typically provide higher coverage limits than the NFIP maximums, as well as a broader range of coverage.
• There is usually a shorter waiting period than the federal 30-day window.
• For some homeowners, private flood insurance may be less expensive.

Cons of private flood insurance

• Private flood insurance may be rejected by mortgage lenders on occasion, necessitating the purchase of a federal policy.
• If you leave the NFIP and purchase private coverage, you may face a significant rate increase if you return to the NFIP.
• Some private insurance companies will not insure all types of properties. Mobile homes, houseboats, and recently flooded properties are examples of common restrictions.
• The federal government backs NFIP policies, which may provide more security than a private company that may go out of business.

Private flood insurance companies to consider

The private flood insurance companies listed below are widely available and may be able to provide coverage for your home. Keep in mind that these are only suggestions. An independent insurance agent in your area may be able to assist you in locating other options.

Aon Edge

The Aon Edge EZ Flood policy covers your home's structure up to $1.25 million and your personal belongings up to $875,000, with options to add coverage for swimming pool cleanup, spoiled food, and living expenses if you have to relocate while repairs are being made. Unless you purchase your policy as part of a loan closing, there is a 15-day waiting period.

According to the company, it saves policyholders an average of 40% over NFIP coverage. Except in Alaska, Hawaii, Kentucky, and Washington, D.C., EZ Flood insurance is available through agencies across the United States.

Chubb

Because Chubb specializes in high-end home coverage, its flood insurance policies go far beyond what the NFIP provides. You can insure your home's structure and contents for up to $15 million in total, and the company will also cover damage to personal belongings and built-in items in your basement. Additional living expenses, if necessary, are also covered, as is debris removal up to $250,000.

If you live in a flood-prone area, Chubb will reimburse you up to $5,000 for flood-prevention measures such as moving valuable items out of your home or placing sandbags around your foundation. Chubb provides flood insurance in 38 states, as well as Washington, D.C.

Neptune Flood

Neptune, which is available in Washington, D.C., and every state except Alaska and Kentucky, has a slick website where you can get a flood insurance quote in a matter of minutes. Damage to items in your basement, swimming pool refills, and additional living expenses if you need to stay in a hotel while your home is being repaired are all covered by Neptune's flood insurance.

It also has significantly higher coverage limits than the NFIP: up to $4 million for your home's structure and $500,000 for its contents. Coverage begins 10 days after you purchase the policy — or immediately if purchased in conjunction with a mortgage.

Private Market Flood

The Flood Insurance Agency, which also sells NFIP policies, sells private market flood insurance. Although the policies are nearly identical, the agency's private flood insurance policy provides greater coverage limits: up to $500,000 for the building and up to $250,000 for contents. Depending on the circumstances, the waiting period can range from 0 to 14 days.

Except for Kentucky, New York, Washington, D.C., and Monroe County, Florida, Private Market Flood policies are available nationwide.