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    Pennsylvania Insurance Department

    Learn About Flood Insurance

    Flooding is Pennsylvania’s most common natural disaster. Flood damage can happen anywhere and at any time, even if your home or business is not located in a floodplain.

    Do I Need Flood Insurance?

    The short answer is, it's very likely. Why? Well -

    • Standard homeowner's or renter's policies do not cover damages resulting from a flood.
    • All 67 counties in Pennsylvania have seen destructive flooding, and over 40% of flood insurance claims are outside high-risk areas.

    Is Flood Insurance Fun - or Even Interesting?

    We definitely can't promise that, but what we can say is that this information is so important!

    In the event you're impacted by a flood, knowing you're home and belongings are covered is well worth what might be considered a 'dry' read.

    Understanding Your Property's Risk

    Your property's risk of flood is most commonly determined by the Federal Emergency Management Agency (FEMA). Though if you purchase a policy from a private insurance company, they may make their own assessment. 

    FEMA provides a Flood Map Service Center Tool that allows you to search for flood risk by address.

    Even if you are in a moderate-to-low-risk area, flood insurance can be a worthwhile investment, and you can buy flood insurance even if your property is not located in a floodplain.

    In some cases - like those with a high risk of flooding - federal law may require you to have flood insurance in order to get a mortgage.

    Shopping for Flood Insurance

    Start by learning about the different types of insurance. Your property may not be eligible for all types, but compare your options, shop around as much as possible, and decide what works best for your needs and budget. 

    Remember - the lowest premium may not always be the best option. Look at what's covered, what's excluded, and how much you're deductible is. A plan that costs less but doesn't provide you the coverage you need isn't really a savings.

    Homeowners and renters can purchase flood insurance from 3 main types of insurers.

    Types of Flood Insurance

    Commonly referred to as the NFIP, this is the federal government program administered by FEMA that provides federally-backed policies offering government stability and capped annual rate Increases.

    Visit the NFIP Flood Insurance home page to get a quote, get help with an existing policy or for more information on flood insurance.

    A commercial insurer that writes and financially backs its own policies and can therefore provide more flexible coverage, higher coverage limits, or additional features compared to an NFIP policy.

    View a listing of private flood insurance companies in Pennsylvania. 

    A specialty insurer that provides coverage for high-risk or unique properties in flood-prone areas that other insurers will not cover.

    Important Note: Surplus-lines insurers are private insurers, but there are distinct differences to be aware of when deciding if this type of insurance is right for you.

    Resoruces

     

    Comparing the Different Types of Flood Insurance

    When purchasing flood insurance, it's important to understand the differences between each type of insurance.

    NFIP

    Pros

    • Guaranteed Availability: If your community participates in the program, you cannot be denied coverage, regardless of flood risk.
    • Government Stability: Federally backed, policies are rarely canceled, offering peace of mind, especially in high-risk areas.
    • Capped Rate Increases: Annual rate increases are capped. The NFIP is not able to increase rates beyond statutory limits. 

    Cons

    • Lack of Customization and Flexibility: Policies have standardized terms and limits that cannot be increased or changed.
    • Potentially Less Coverage: Standard NFIP policies offer less extensive coverage compared to what private insurers can provide. 
    • Not Available in All Areas: NFIP insurance is not available in all areas.

    Private Flood Insurance

    Pros

    • Higher Coverage: You can obtain higher coverage limits than what is offered by the NFIP.
    • Greater Flexibility: You have more options to tailor the policy to your specific needs, such as basement contents, business interruption coverage, replacement cost for personal property, and temporary living expenses.
    • Faster Claims Processing: Some offer more personalized service and faster claims processing when compared to the NFIP.
    • Competitive Pricing: Rates are market-based and can be more competitive than NFIP policies, though they vary based on location, risk factors, and the insurer's specific models.
    • Independent Risk Assessment: Private insurers conduct their own risk assessments, which can sometimes differ from FEMA's standardized maps.
    • Consumer Protections: Private flood insurers are licensed and regulated by the state, offering more consumer protection than non-admitted insurers (like surplus lines insurance).  Those protections include: Guaranty Fund protection, which is similar to FDIC insurance for bank accounts. If your insurer is unable to pay your claim, the Guaranty Fund will pay it.  They are also subject to rate and form reviews, so you are less likely to experience major rate increases without reasonable cause.

    Cons

    • Lender Acceptance Issues: Not all private policies meet federal standards, and mortgage lenders may not accept them.
    • Less Stability: Private insurers can choose not to renew or cancel your policy, even mid-term, leaving you without coverage.
    • Switching Can Be Expensive: If you currently have NFIP coverage and choose private coverage, your premium could increase significantly if you then choose to return to the NFIP at a later date.
    • Higher Cost: While cost can sometimes be lower with private insurers, some policies can be more expensive than NFIP coverage, or have higher deductibles.
    • Grant Funds Ineligibility: If a major flooding event occurs, you may be ineligible for some Hazard Mitigation Grant Programs available through FEMA that are only available for those insured through the NFIP.
    • Unique Exclusions: Policies may contain unique exclusions or conditions.
    • Limited Availability: Private flood insurance isn't available in all markets, and private insurers can be selective, choosing not to offer coverage based on specific conditions.

    Surplus Lines Insurance

    Pros

    • Coverage for Unique Risks: Surplus lines insurance can provide coverage in situations that a standard insurance company will not.  This can include high-value properties, unique characteristics, and/or those in high-risk areas.

    Cons

    • Same 'Cons' as Private Flood Insurance: Surplus lines insurance IS private insurance, so surplus lines policies face the same disadvantages detailed under private insurance, as well as some additional considerations, unique to surplus lines insurance, like:
      • Higher Premiums: Surplus lines policies typically have higher premiums because of the high-risk nature of the coverage.
      • Less Consumer Protection: Surplus lines are considered non-admitted carriers, so they are not directly licensed or regulated by the state.  There is some oversight, but they are not backed by federal or state guaranty funds and are not subject to the same regulations as other policies, creating a risk of insolvency (an inability to pay your claim) or the potential for large rate increases.
      • Varying Non-Standard Coverage: Policy terms, conditions, and coverage levels can vary widely, so careful review is needed to ensure adequate protection.

    Understanding Flood Insurance

    When you're shopping for flood insurance, it's important to be aware of the different types of coverage that are available, what your policy includes, and when your coverage starts or becomes effective.

    Types of Flood Insurance Coverage

    One of the most important differences for consumers to be aware of is coverage for the dwelling versus coverage for the contents.

    • Coverage for the dwelling will cover the structure of the building, but can sometimes include installed appliances like the water heater or furnace.
    • Contents coverage will cover your personal property within the dwelling. 

    When insuring a business property, personal property is not covered under the standard policy. However, coverage is available for an additional premium.

    These terms describe how the insurer will calculate the payout for damaged or destroyed property.

    • Replacement Cash Value (RCV) - This payout amount will be higher because it covers the cost to replace your damaged property with a new item of like kind and quality. RCV policies typically have higher annual premiums.
    • Actual Cash Value (ACV) - This payout amount will be lower because it covers only the current market value of your property, accounting for its age and wear and tear. The insurance company subtracts depreciation from the original cost to determine the payout. ACV policies generally have lower annual premiums.

    In some cases, the payout you will receive is based on eligibility criteria.  In others, it is part of the policy you purchase. When shopping for flood insurance,  this is an important question to ask!

    Excess flood insurance is available for both residential and commercial properties that exceed NFIP or private primary limits.

    It covers the part of a loss that is not or will not be reimbursed by your primary policy. The upside is greater financial protection, but there is a separate or additional cost associated with this coverage type.

    Excess coverage can only be purchased from private insurers, and eligibility and cost are based on property value, location, and flood risk.

    Waiting Period

    More than likely, there will be a waiting period before your flood policy takes effect.

    With insurance purchased through the NFIP, there is usually a 30-day waiting period. There are several exceptions to this, like if your policy is bought at the same time as you purchase a home, or a flood map is redrawn. In those cases, your policy may be effective sooner.

    Insurance purchased from a private company typically has a shorter waiting period, like 10 to 14 days, though it can vary. Always ask your agent to confirm so you know what to expect and can weigh your options.

    Need More Help?

    For more help or to get answers to your insurance-related questions, our Consumer Services Bureau can help! Visit our Need Help page.

    * This is an annual posting, updated once each year.  Information may change throughout the year.

    † This information is provided courtesy of the Pennsylvania Surplus Lines Association (PSLA).  The Pennsylvania Insurance Department does not maintain this document or the PSLA website.