Coastal properties face a unique and amplified flood risk from sources such as storm surges, hurricanes, and tidal flooding. While a standard National Flood Insurance Program (NFIP) policy provides a baseline of protection, homeowners in these areas should strongly consider additional riders or private supplemental policies to ensure their investment is fully protected. The best flood insurance riders for coastal properties are those that address the specific vulnerabilities of a home in a high-risk flood zone.
One of the most essential riders is the NFIP’s Increased Cost of Compliance (ICC). This isn’t a separate policy but a built-in benefit of every NFIP flood insurance policy. For coastal properties, this is a vital protection. If a flood damages your home by 50% or more of its market value, local regulations in your community may require you to rebuild to higher, safer standards (e.g., elevating the building). The ICC portion of your policy can provide up to $30,000 to help with the costs of these compliance measures, such as elevation, relocation, or demolition. While $30,000 may not cover the full cost of a major project, it is a significant benefit that is not included in standard private property insurance.
For high-value coastal properties, the NFIP’s coverage limits can be a major issue. The NFIP has a maximum coverage of $250,000 for a residential building and $100,000 for its contents. For a home that is worth significantly more than this, a standard NFIP policy is inadequate. This is where excess flood insurance comes in. Offered by private insurers, an excess flood policy is a separate policy that provides coverage over and above the NFIP’s limits. For example, a homeowner could have a $250,000 NFIP policy and a $750,000 private excess policy, giving them a total of $1 million in coverage for their home. This is a crucial rider for ensuring a total loss is fully covered.
In recent years, the private flood insurance market has become a strong alternative to the NFIP, especially for coastal properties. These policies are not riders but stand-alone alternatives that can be more flexible. They often offer:
Higher coverage limits: Many private policies offer coverage well into the millions for both building and contents.
Broader coverage: Private policies may cover things that the NFIP excludes, such as damage to basements, swimming pools, decks, and landscaping.
Additional Living Expenses (ALE): This coverage, often a standard part of private policies, pays for temporary housing and living costs if you are displaced from your home due to a flood. The NFIP does not provide ALE coverage.
Faster claims handling and no waiting period: Some private insurers offer a much shorter or even non-existent waiting period, allowing for a quicker response time after a disaster.
For coastal residents, a comprehensive flood insurance strategy often involves a combination of these options. They might secure a baseline NFIP policy and then purchase an excess policy to cover the full value of their home, or they might opt for a private policy from the start that includes a full range of coverages and a higher limit.