What's the difference between private flood insurance and NFIP policies?

The Federal Emergency Management Administration (FEMA) administers the National Flood Insurance Program (NFIP) policies. They were the only option for flood insurance until 2012. Private flood insurance is provided by private companies rather than the federal government, and it typically offers more flexibility and broader coverage options than standard FEMA/NFIP policies.

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A brief history of private flood insurance and the NFIP

Flood insurance was almost unheard of before the 1970s, primarily because predicting the frequency, location, and cost of flooding was challenging. In 1968, the federal government recognized a need for flood insurance. It passed the National Flood Insurance Act, which created the NFIP. For more than 40 years, consumers purchased almost all flood insurance policies through the NFIP.

Congress reauthorized the NFIP in 2012 and included provisions to bolster a private flood insurance market. With advanced computer modeling, machine learning, and AI, it's become easier for private companies to offer flood insurance. Learn more about how flood insurance works.

Is the WYO Program for flood insurance the same as private insurance?

No. FEMA designed and launched the Write Your Own (WYO) Program in 1983 so private insurance companies could help FEMA write and service flood insurance policies. The NFIP still underwrites the policies, and it also pays any claims. Policies issued through this program are the same as policies issued directly through the NFIP.

But the WYO Program has helped private insurance companies gain decades of flood insurance experience. This is another reason why private insurance companies are now better able to develop their own flood policies.

Private flood insurance vs. FEMA/NFIP insurance

Private flood insurance policies tend to offer more flexibility and broader coverage options than the standard FEMA/NFIP policy. Here's a quick breakdown of some of the key differences between the two:

	Private flood insurance	FEMA/NFIP policy
Dwelling coverage limits	Private flood insurancePotentially up to $500,000 or more, depending on the insurer and your flood risk	FEMA/NFIP policyUp to $250,000
Contents coverage limits	Private flood insurancePotentially up to $250,000, depending on the insurer	FEMA/NFIP policyUp to $100,000
Loss of use coverage	Private flood insuranceAvailable, depending on the insurer	FEMA/NFIP policyNot available

Not all private flood insurance providers offer the same coverages and limits. Check with your own insurance company or agent to find out what options are available to you.

What's the cost difference between NFIP and private flood insurance plans?

The cost of any flood insurance policy is dependent on whether your home is in a high, medium, or low-risk flood zone, proximity to bodies of water, elevation, and coverage limits. Because there's much greater flexibility in coverage limits on private flood insurance plans, that's where you're likely to see the biggest differences in cost. As private flood insurance companies gain more experience with flood coverage, the rates they offer may decrease over time due to increasingly accurate risk evaluations.