The National Flood Insurance program (NFIP) is, of course, a federal government program set up back in the early 1970s to provide a market for flood insurance for home owners. Back then, private insurance companies would not offer flood insurance. It has only been in the last few years that some private insurance companies have been willing to insure against the peril of flood.
So, what is a Private Market Flood Policy? It is a policy issued by companies like Hiscox, Lexington, various syndicates at Lloyds of London, etc. These companies are licensed to do business in South Carolina but are considered Excess & Surplus Lines carriers and are not covered by the SC Guaranty Act. Is that important? Yes, because if the company goes out of business, you the policyholder are left holding the bag – no premium refund, no claim payment.
The policy conditions are basically the same as the NFIP policy. Private Market carriers do offer more coverage. You can buy higher limits (NFIP’s maximum limits are $250,000 for building and $100,000 for contents). You can buy Loss of Use or Loss of Rents coverage. You can buy replacement cost coverage on the home (NFIP provides replacement cost coverage only on primary residences). You can buy replacement cost coverage on contents (NFIP is ACV, actual cash value).
Premium-wise, a Private Market policy can cost a lot more than the NFIP policy, or a lot less. The only way to tell is to get a quote from your agent. And your agent can usually quote Private Market just as easily as NFIP.
