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Debunking Misconceptions About Private and Excess Flood Coverage

By John Hannah, AVP, Insurance Solutions, SWBC’s Financial Institution Group | November 8, 2022

This post is part of a series sponsored by SWBC.

At industry conferences across the country, the most common challenges I hear from brokers about offering private and excess flood insurance stems from affordability and accessibility. In fact, these are two of the top selling points for this type of coverage.


Private and excess flood continues to become more and more affordable now that the NFIP is deploying Risk Rating 2.0, which is levelling the playing field. The NFIP’s mandate and purpose prevent it from excluding prior loss properties, which should, over time, transition the program into a higher risk pool—unless agents continue to use it like a preferred market and artificially prop it up.


Agents and brokers have been reluctant to quote and issue flood insurance in the private market due to lengthy manual applications, trailing documents, policy issuance in excess and surplus markets, and a lack of training, but private flood insurance is evolving rapidly to address those concerns.

Private flood providers are evolving to offer real time online quoting platforms with high levels of accessibility that are much easier to use.

Insurance commissioners recognize the value of growing the private flood market and many states are adding them to their export lists so agents and brokers no longer need to obtain declinations from admitted markets. Many private flood providers are in the process of developing and releasing admitted options, but they need agents’ help to keep the momentum.

Without adequate volume and normalized results, insurers won’t have the confidence needed to commit to filing and issuing coverage on an admitted basis.

Unlike the NFIP, private markets aren’t constrained by unpopular and sometimes arbitrary rules like waiting periods, elevation certificates and the inability to cancel a policy, which will continue to offer them a competitive advantage.

NFIP Coverage Limitations

Standard flood insurance through the NFIP does not usually cover:

  • Sub-level structures, including basements
  • Damage incurred from moisture, mildew, or mold not directly caused by flooding
  • Replacement value of precious metals, stock certificates, bearer bonds, or cash
  • Exterior features such as trees, septic systems, walkways, decks and patios, fences, or pools
  • Temporary housing
  • Loss of income
  • Vehicles

The Value of Private Flood Insurance

In late September, Hurricane Ian devastated thousands of homes in southwest Florida, leaving 119 people dead and causing over $40 billion in property damage. It was one of the most destructive and costliest storms to ever hit the state.

In the past weeks, residents have returned to their flood-damaged homes feeling overwhelmed about the prospect of having to rebuild—many without the benefit of flood insurance.

According to the New York Times, “In the counties whose residents were told to evacuate, just 18.5 percent of homes have coverage through the National Flood Insurance Program (NFIP).”

“Within those counties, homes inside the government-designated floodplain, the area most exposed to flooding, 47.3% of homes have flood insurance. In areas outside the floodplain—many of which are still likely to have been damaged by rain or storm surge from Ian—only an estimated 9.4 percent of homes have flood coverage.”

In many cases, even those fortunate enough to have had NFIP coverage are now facing staggering costs to rebuild. For example, residents of Lee County (one of the most heavily impacted areas) recently saw their property values increase 32.4% for an average sale price of $577,953, which means the maximum NFIP building coverage accounts for less than half of what it will cost to rebuild.

Private and excess flood insurance goes much farther than the standard coverage limits under the NFIP. Depending on the policy, excess coverage can cover the total cost of rebuilding your clients’ homes, regardless of the size or expense. It can also cover the actual cash value of stand-alone contents that may be valued above the NFIP limits.

Private flood insurance also covers funding for clients’ living expenses to help them navigate the rebuilding process. If they have to temporarily relocate, private insurance may also provide for short-term housing.

SWBC’s excess flood insurance coverage goes above and beyond the standard coverage limits offered by the NFIP. The program also covers funding for living expenses to help the insured through the transition process, which is something the NFIP does not offer.

In addition, SWBC is rapidly expanding coverage to help agents access new private flood insurance options for their clients so that they can offer direct alternatives to the NFIP.

Visit our website to learn more about our excess and private flood insurance options.

Topics Flood Excess Surplus

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