Usually, a standard flood policy is enough to cover a home. However, there are extenuating circumstances that require additional flood insurance…cue Excess Flood Insurance. Excess Flood Insurance is a special type of insurance purchased through the National Flood Insurance Program (NFIP) if your home is in a particularly high-flood zone. Many times, lenders will require additional flood insurance outside the scope of standard flood insurance if you’re purchasing a home or refinancing in a high-risk area. So when is standard flood insurance not enough? Well, if the following applies:
- If it would cost more than $250,000 to replace or repair your home
- High-Risk flood zone area
The difference between Flood and Excess Flood is this: a standard policy through the NFIP covers you up to $250,000. If your home is worth more than that or if you’re in an area prone to flooding, you should consider Excess Flood in order to cover the difference. Excess Flood kicks in where the standard flood coverage ends.
One neat thing about Excess Flood Insurance is that the policy can be transferred should you sell your home. The new owners can acquire the previous policy by submitting proof of purchase to your insurance company along with a request signed by both the prior owner and the new homeowner. This ensures seamless coverage and is a selling point for potential buyers.
One important thing to note is that Excess Flood Insurance can be pricey. There are many factors that play into the cost of Excess Flood, including:
- Home’s location, age, and flood zone
- How high your home is elevated or
- What floor your condo is on
- Which way the building faces (water or inland)
- How much coverage you wish to purchase
- Distance from your home to the water
- Size of deductible you’re willing to pay
These are all points that must be considered by the insurer when it comes to issuing this special policy.
There are, however, some stipulations to Excess Flood Insurance, including what’s not covered. Please be advised, Excess Flood Insurance would not cover the following:
- Cash, art, jewelry or other expensive items
- Lost rental income from an investment property
- Basements in homes close to water
- Homes in areas that insurers consider too high a risk
All in all, Excess Flood Insurance is a unique product and getting an insurance professional involved as early as possible is your best bet for making sure your home is properly insured. Please contact a Ramey King Personal Lines associate today to start protecting your home soon!