Pros and cons of buying flood insurance from a private company instead of FEMA
Jan 13, 2025, 10:25 PM | Updated: Jan 14, 2025, 4:55 pm
SALT LAKE CITY — Flood damage is often the costliest disaster for homeowners. Just one inch of flood water can cause $25,000 in damage, according to the Federal Emergency Management Agency.
Whenever flooding does strike, you’ll see many news reports about how those impacted can turn to FEMA’s National Flood Insurance Program. However, some homeowners with FEMA’s flood insurance have said it’s woefully inadequate, especially in Utah, where many folks have finished basements.
Coverage from FEMA’s flood policy does not include floors, ceilings, and carpeting. Nor does it cover personal belongings you keep in the basement, like furniture or electronics.
While many of us learn that if our home is considered “high risk” when we move in, “low risk” does not mean “no risk.” No matter where you live, you run the risk of flooding.
In fact, First Street Foundation, a nonprofit researching climate risk, found that 78% of properties flooded by last year’s Hurricane Debby were outside of FEMA’s designated flood zones.
And even out West, far from hurricane country, FEMA says “around 40% of flood insurance claims … come from areas outside of designated high-risk flood zones.”
“Often flooding happens in areas that aren’t in FEMA flood zones,” said Holly Lawrence, a spokesperson for FloodSimple, a private flood insurance company.
Lawrence says the demand for a-la-cart flood insurance options is growing.
“By shopping around you can find a more affordable plan,” she said.
Lawrence says private flood insurance may be a better option over FEMA if you need high coverage limits, want additional coverage, or if you live in a low-to-moderate risk flood zone where FEMA rates tend to be high. But if you live in a place where the flooding risk runs high, private insurance can do more damage to your wallet.
“For some people, FEMA is the best option,” she said. “It just depends on the individual home.”
Now, a FEMA flood policy requires you to wait 30 days before it takes effect. The typical waiting period on private flood insurance is half that time. However, FEMA won’t cancel your policy if you pay your premium, whereas a private insurer might choose to cancel at the renewal time.