Best Flood Insurance Companies in 2016

Floods are the most common type of natural disaster in the United States, leaving behind devastation in their wake both before and after the water recedes. Although many people think flooding is an issue that affects people who live in coastal or low-lying areas near bodies of water, any property located in an area that receives rain is susceptible to flooding. Chances are, this might include your property.

What Causes Floods?

Some floods are predictable. Rain from a tropical disturbance can dump large amounts of water in an area over a short period of time, and melting snow runs off into rivers and lakes, which causes them to overflow their banks and spread into neighboring communities. You might expect or anticipate this at certain times of the year in certain places. Yet, a flood can happen any time water rises faster than it drains, including in inland areas far from the coast. This results from any of the following scenarios:

  • Dam failure
  • Levee damage
  • Unusual levels of heavy rainfall
  • Changes in drainage due to construction
  • Hurricanes and tropical storms
  • Snow melt

Predicting flood damage is a challenge because a flood can happen without warning. Sometimes floods occur in places that have no history of flooding. A dam used for irrigation, water supply or hydroelectric power may not be able to contain an excessive amount of rainfall or suffer a debris jam that sends water over the top of the structure. Construction projects sometimes change natural drainage patterns that may not be visible until after the drainage problem leads to widespread flooding. Flood insurance protects your property when the unexpected happens.

Where to Find Flood Insurance

Finding flood insurance is different from buying home or auto insurance. The top flood insurance companies in 2016 don’t underwrite the policies, but they can give you a flood insurance quote for a policy through the Federal Emergency Management Agency’s National Flood Insurance Program or a private company that specializes in flood insurance.

Until the mid-20th century, insurance companies included flood coverage with standard homeowner policies. After suffering significant losses as a result of devastating floods in the Midwest, companies decided to stop underwriting flood insurance. It was too difficult for the companies to manage the risk, because an area could go more than a century without a flooding incident until a single flood came along and wiped out the company’s reserves. Although there are still a few private flood insurance companies, most people have a policy that comes from the federal government.

Compare the Top Flood Insurance Providers

When you speak to a licensed insurance agent about flood insurance for your property, the agent can sell you a policy through the National Flood Insurance Program (NFIP) unless it also works with a private insurer in your area. Although you can’t purchase a policy directly from the NFIP and must go through an agent, the agents and their companies have no authority to set rates. As a result, the coverage and premium for your property doesn’t vary between companies.

In addition to selling you a policy, your insurance company also has the responsibility to process your claims, so you want to work with a business you trust to help you through the process. Choosing the right flood insurance provider means choosing the company with customer service and financial strength ratings that most effectively fit your needs instead of looking for the lowest rates and coverage.

AllState Flood Insurance

With A or higher ratings from A.M. Best, Moody’s and Standard & Poor’s, AllState has a reputation for helpful customer service and paying claims in a timely manner. An AllState agent can help you determine the amount of flood insurance you need to cover your property and belongings. The agent can also help you find out if you qualify for a preferred risk policy that costs less than standard high risk policies do. Before you speak with an agent, you can use the Common and Costly Claim Tool on the company website to see the most common claims in your area and their average costs.

Geico Flood Insurance

Originally started as a private insurance company for federal employees in the Washington, D.C. area, Geico now offers insurance for the general public across the country. The company has at least A ratings for financial strength from A.M. Best, Standard & Poor’s and Moody’s Investors Service. You can find plenty of information about flood insurance and options for requesting a quote on the company’s website. Geico’s website also features a personal property calculator that estimates the total value of your personal belongings. This information can help you decide how much coverage you need.

State Farm Flood Insurance

Like most major insurance providers, State Farm doesn’t offer separate flood insurance for property owners. In 2010, the company also stopped writing new policies for the NFIP to focus its efforts on the products and customer service that earn it top ratings from customers and industry organizations. If you go to the company’s website to find information about flood insurance, you can see that it directs you to the NFIP website and offers some tips for preventing flood damage.

USAA Flood Insurance

United Services Automobile Association, also called USAA, offers insurance products and investment services to current and former military members and their spouses and children. The organization enjoys high ratings from its customers for its quality of service and the products it offers. In addition to NFIP insurance for those who live in NFIP communities, USAA works with private insurance companies that also provide flood coverage. This is useful if you don’t qualify for the federal flood insurance program but still need the protection against rising water.

National Flood Insurance Program

Although the Federal Emergency Management Agency (FEMA) assists flood victims, there’s no FEMA flood insurance program. Instead, Congress established the NFIP in 1968 to help protect property owners from the effects of floods and reduce the costs of disaster assistance that the federal government incurred after major floods struck areas. The NFIP still does this by working with individuals and communities to reduce potential damage in flood-prone areas.

One of the NFIP’s primary functions is providing affordable flood insurance for property owners and renters who can’t afford private flood insurance. To qualify for the federal flood insurance, the property owner must live in a community that agrees to implement ordinances like restricting development in flood hazard areas in an effort to reduce flood risks. The NFIP’s policies cost less than private flood insurance policies and are backed by the federal government.

Flood Insurance Rate Map

Flood Insurance Rate Maps show which areas within a community are prone to flooding. Municipalities use these maps when they establish building requirements for land along coastal areas or in floodplains so their residents can qualify for NFIP insurance. Lenders use these maps to determine which borrowers need flood insurance to protect mortgaged property. FEMA uses these maps to calculate flood insurance rates.

These maps indicate high-risk flood zones by the letters A or V. Moderate to low risk zones, also called Non-special Flood Hazard Areas, have the letters X, B or C. Areas without flood assessment are marked by the letter D. Flood-prone areas are more likely to flood and cost more money to insure.

You can view your property’s flood risk online at FEMA’s Flood Map Service Center. Enter your street address to see your property on the map. You can also see the schedule for updating your neighborhood’s map. Changes to the map lead to changes in the cost of flood insurance, so this information helps you prepare financially.

How Much Is Flood Insurance?

With an average annual premium of $700, NFIP flood insurance is affordable, although your premium may be higher or lower than this average. This insurance is federally backed, and FEMA — not insurance companies — sets the rates by ascertaining your property’s risk for flooding. As with any insurance product, FEMA determines premiums by looking at several risk factors, including:

  • The year a building was constructed
  • The type of construction and materials used to build the building
  • The number of people living or operating businesses within a building
  • The number of floors in a building
  • The location of the owner’s belongings within the building
  • The location of the lowest floor relative to the flood-prone area
  • The property’s location on a flood map
  • The history of flooding in the area
  • The policy’s deductible and amount of coverage

Premiums also include a Federal Policy Fee and the Homeowner Flood Insurance Affordability Act of 2014 Surcharge that help offset the costs of covering claims so the program is self-sustaining and doesn’t have to borrow from the government. If you live in a community that uses the Community Rating System to reduce the risk of flooding, you may qualify for a discount. Here’s a sample of average premiums for a Preferred Risk Policy:

Coverage for Building/Contents Annual Premium for Building and Contents Coverage for Contents Only Annual Premium for Contents Only
$20,000/ $8,000 $146-$177 $8,000 $48-$71
$30,000/ $12,000 $184-$215 $12,000 $68-$101
$50,000/ $20,000 $246-$277 $20,000 $106-$145
$75,000/ $30,000 $291-$327 $30,000 $123-$169
$100,000/ $40,000 $324-$360 $40,000 $138-$189
$125,000/ $50,000 $341-$378 $50,000 $153-$210
$150,000/ $60,000 $364-$400 $60,000 $168-$231
$200,000/ $80,000 $400-$442 $80,000 $196-$255
$250,000/ $100,000 $425-$474 $100,000 $226-$280

FEMA doesn’t list premium ranges for properties in high-risk areas because too many factors — such as the frequency of flooding and the type of construction within the region — can affect the prices. You need to speak directly with a licensed insurance agent to find out the specific rates for your property if you live in such an area.

Flood Insurance Payments

When you purchase flood insurance, you must pay the entire premium annually and can’t divide the cost into monthly payments. You can pay this premium with a check or credit card, and your insurance agent can assist you with the payment process. Some lenders let you incorporate the cost of flood insurance into a mortgage loan so they know you have the coverage.

What Does Flood Insurance Cover?

Flood insurance covers residential and commercial buildings and personal property located inside them, and there are separate deductibles and premiums for building and contents coverage. When you purchase a policy, you have to decide whether you want coverage only for the property and structures permanently attached to it or if you also want to protect your personal belongings inside the buildings on the property. Protected items can include:

  • The insured building, including the foundation
  • Electrical and plumbing systems
  • Air conditioners, furnaces and water heaters
  • Refrigerators, stoves, dishwashers, microwaves, washers and dryers
  • Food freezers and the food stored in them
  • Permanently installed carpet, paneling, wallboards, bookcases and cabinets
  • Window blinds and curtains
  • Detached garages
  • Debris removal
  • Clothing, furniture and electronic equipment
  • Original artwork and furs up to $2,500

Federal flood insurance also offers limited coverage for basements and crawlspaces depending on factors like the elevation of the land and type of construction. It doesn’t cover damage caused by moisture, mold or mildew; damages to currency or stock certificates; property normally stored outside the home; landscaping; vehicles or detached buildings. Aside from detached garages, these structures need separate policies if you want to protect what you store inside them. Flood insurance doesn’t cover temporary living expenses or financial losses that occur as the result of a flood.

Do I Need Flood Insurance?

If you live in what FEMA determines is a high-risk area, you must have flood insurance as mandated by Congress. Properties in these areas have a 25% chance of flooding during a 30-year period. The federal government wants to minimize the amount of financial assistance it provides after a disaster because it uses taxpayer funds to pay for the losses.

Your mortgage lender may also require you to maintain flood insurance to protect its interest in your property, especially if you live in an area prone to flooding. The highest-risk states for flooding are Georgia, Massachusetts, North Carolina, South Carolina, Virginia, New Jersey, New York, California, Louisiana and Florida.

Even if the law or your lender says you don’t have to have flood insurance, you should consider it. According to FEMA, more than 20% of the claims filed each year and one third of federal disaster assistance recipients come from flooded homes that aren’t in high-risk areas. Remember, there’s a potential for flooding anywhere that it rains. If you have flood insurance, you have the financial protection you need to recover and rebuild after the disaster.

You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved.
Published September 6, 2016
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