PSA : Shop around for your flood insurance options

[ctuser1]

I have a small brook behind my house. I am in flood zone AE, pretty close to the "floodway" of the brook in the back. The proximity to floodway + the AE zone throws off the risk calculations of the FEMA flood polity. They want to charge me $1800/year, that will step up a minimum of 20% every year to a "full risk premium" of $5k+/year in a few years. In the earlier years, we were all stuck with this. One of my neighbors, for example, told me they pay the $5k/year FEMA premium.

The actual $$ risk due to flood isn't what I would term as catastrophic - once or twice every 100 years possibility of rain driven river flood that may cost $30k-$40k in today's money to clean up. There is almost zero possibility of structural damage due to flood unless water sits for days (which doesn't happen with this brook). Reference: there was no actual $$ flood damage to the house during Sandy, which generally caused a lot of damage in the area. So I want to self-insure, and carry flood insurance only because the mtge company requires it.

Thankfully, in the last year or two, a lot of private flood insurers have entered the market. I used to shop around every year, and would generally pay < $2k/year for flood insurance.

This year, my agent got a quote from a new company named "Trisura Speciality Insurance" for a grand total 1 Year premium of $767.64! That is almost a $1k lower than my next lowest premium from privatemarketflood.com.

Yay!!

Please shop around if you need flood insurance now. You might save thousands.

[LostGirl]

I thought you could it get flood insurance from FEMA. That is what two insurance agents told me when I purchased a property near (but flood zone x) a flood zone.

[ctuser1]

FEMA is the default provider for most people. But there is an increasing number of private insurance companies in the market for flood insurance.

When I bought the house in 2017, I got policy from privatemarketflood.com for $1700/year. They were the only private flood insurance game in town at that time.

In Feb 2020, my agent told me there are now many more providers in the market. However, we were in a hurry (bad planning on my part) so we could not properly shop around. I asked the agent to start shopping around now for next year, and found a policy much cheaper than even privatemarketflood.com..

FEMA policies are often mispriced. For very high risk houses they are generally underpriced. This is why they are chronically underfunded and would be bankrupt if they were not backed by the US Govt.

For lower risk houses (e.g. mine) they are often overpriced. Yes, the knee-depth brook in the back can flood, but it can't cause the kind of damage that, e.g. the Connecticut river (https://en.wikipedia.org/wiki/Connecticut_River) can cause. FEMA still wants me to pay the same rate. In such cases, it makes more sense to shop around in private market.

[LostGirl]

Thanks for the tip!

[ctuser1]

Thanks for the tip!

You are welcome! I'll be very happy if it proves useful for you or anyone else.

[moneypitfeeder]

That's really good info! We used to have flood insurance that was getting ridiculous in cost vs. what was covered. FYI For anyone that thinks maybe the original flood cert requirement might not apply to their structure (just blanketed over a large location) you can have an engineer come out and re-certify your property. We were able to drop our flood insurance while still satisfying our mortgage holder because our lowest elevation was deemed high enough.