Top 5 Tips for Choosing the Right Flood Insurance Policy in Louisiana

As a coastal state, Louisiana is vulnerable to flooding and storm damage. According to the Insurance Information Institute (III), flood damage is one of the leading causes of home and property loss. While standard homeowners insurance doesn’t cover flood damage, buying a policy to protect your home and belongings is possible. The following tips can help you choose the right approach:

Know Your Risk

While Louisiana homeowners may not be required to purchase flood insurance by law, many mortgage lenders require it for home loans made in high-risk zones. Additionally, the federally-backed NFIP provides coverage for homes in those areas. The agency’s risk rating system is now based on the property’s elevation, foundation type and how often it has flooded in the past rather than solely on flood zone proximity. A floods policy typically covers the structure of a home’s system and personal belongings inside the house. However, a standard homeowners policy doesn’t cover the cost of repairing or replacing items ruined by flooding. Thankfully, many insurance agentsoffer flood insurance Louisiana from the NFIP and private insurers that do. However, choosing private insurance companies over NFIP can allow homeowners to customize policies to their specific needs and access potentially faster claims processing, ensuring more tailored floods insurance coverage and a better customer experience. The national average NFIP flood insurance rate is $62 per year, but rates can vary from one home to another depending on the property’s specific risk. You can check your risk using the map tool or ask your local insurance agent to help.

Ask Questions About Flood

Regarding flood insurance, you may know less than you would like. Fortunately, a little research can help you choose the right policy for your home in Louisiana. Whether you live in an area at risk of flooding or not, flood coverage is a smart investment. It complements your standard home insurance and extends protection for risks your home policy won’t cover. A National Flood Insurance Program (NFIP) flood insurance policy costs $744 per year in Louisiana. However, some private flood insurers offer lower premiums than NFIP rates in most Louisiana cities. In addition, many private flood insurance companies are surplus line carriers, meaning they do not have to pay into a state’s guaranty fund if they go out of business. Fortunately, homeowners with mortgages can usually have their flood insurance premium escrowed into their monthly mortgage payment. This makes fitting a new policy into the budget easier and removes an obstacle that could keep some households from buying it.

Compare Coverages of Flood

Many homeowners mistakenly believe their home insurance will cover damage caused by floods. This is not the case; a separate flood policy is required to protect your Louisiana property from this disaster. You can purchase a floods insurance policy from the National Flood Insurance Program (NFIP) or a private insurer. If you live in a high-risk area, you’re likely required to buy a policy. Policies typically offer building and personal property coverage. The building property portion covers the structure at replacement cost value, which takes depreciation into account, and the personal property portion offers a lower, actual cash value payout for items like furniture, clothes and appliances. The rates you’ll pay for the policy will vary based on your home’s risk level and whether it’s in an SFHA or an AE Zone. You can also choose a high or low-deductible plan, which will influence your premium and how much you’ll pay out-of-pocket in case of a claim. Generally, higher deductible plans have lower monthly premiums, while low deductible policies tend to have more expensive monthly premiums.

Consider Deductibles

While the average floods insurance policy costs $744 per year in Louisiana through the National Flood Insurance Program (NFIP), that figure doesn’t necessarily tell the whole story. NFIP premiums depend on several factors, including foundation type and the frequency of flooding in your area. In addition, your deductible will also affect the cost of your policy. In fact, according to the Insurance Information Institute (III), flood insurance rates are higher in areas with an increased risk of flooding than in those with low or moderate risk. However, with the new Risk Rating 2.0 system implemented by FEMA, your home’s location is not as much of a factor in determining NFIP premiums as it once was. While homeowners’ insurance generally excludes floods damage, if you live in an area of moderate or high risk of flooding, your mortgage lender may require that you purchase coverage. You can also obtain a private flood insurance policy for extra protection. 

Know Your Policy Limits

Your home is one of your largest financial investments. Protecting it requires careful consideration and a thorough knowledge of homeowners insurance in Louisiana. On average, a flood insurance policy in Louisiana costs $752 per year through the National Floods Insurance Program (NFIP). If you live in a high-risk flood zone, mortgage lenders will require that you have flood insurance to qualify for a loan. You can purchase a floods insurance policy from the NFIP or a private insurer. Private insurers typically offer two kinds of policies: a base policy similar to an NFIP policy and a supplemental policy for additional coverage. You can check the flood zones for a property using FEMA’s flood maps tool and LiDAR technology. If you are considering purchasing a property in a flood zone, you may want to get a supplemental policy from a private carrier for added protection.

Related Articles

Back to top button