Flood insurance is a necessary for many Florida residents. In a state with extensive coastline and thousands of properties lining the beaches, bays and canals within the state, billions of dollars of real estate are at risk to coastal flooding and storm surges. National Flood Insurance Program, which had provide heavily subsidized coverage to property owners was hit hard by property damage claims made after Hurricane Katrina and Superstorm Sandy.

Congress attempted to return the flood insurance program to solvency by substantially increase the premiums for policies. This led to a firestorm of opposition by policyholders across the nation. Congress made some changes to relieve the immediate increases for some property owners, but it is clear that cost of polices from the National Flood Insurance Program will only increase.

A Florida legislator has introduced a bill that would encourage private insurers to enter the Florida insurance market and sell policies. Two companies are now selling private flood insurance policies in the state and the policies are identical to those sold by the federal program.

One of the insurers announced that they were doubling the coverage limits, and will write policies protecting home values up to $500,000 and covering $250,000 for personal property. The federal program only allows $100,000 for personal property.

Ironically, it was the federal rate hikes that have opened the Florida flood insurance market, as under the old subsidized rate structure, private insurers could not compete. Even with the increases, one company official noted they did not expect much competition in Florida.

Reviewing your insurance policies prior to a crisis or natural disaster, such as storm surge flooding is a good way to ensure you will have the coverage when you need it and that it will adequately protect your property.

Source: Claims Journal, “Florida Looks to Private Insurers for More Flood Insurance Options,” Jennifer Kay, March 25, 2014