Private Flood Insurance

[Scott MacDonald]

Hi,

I'm looking at purchasing a property that is in flood Zone AE and the FEMA quote I got is $4,500 which is prohibitively expensive and killing my deal. The property has never flooded according to the owner and my CLUE report so I don't expect it to but my lender requires it and I feel it's good to have in this situation.

My agent has pointed me to some private flood insurance companies who are coming in substantially lower at around $500-1,200. The issue I have is I’ve never heard of any of them and I’m concerned why they are so much cheaper. I don’t want to find myself in a situation of learning the negatives of private flood insurance after the worst has happened. The companies I’ve got quotes from are:

Floodsimple.com

Insurox

Floodsmart.com

NCIP

Is there anything I should know or be concerned with? My lender just requires that the private insurer “follows the National Flood Insurance Program guidelines and it CAN’T be more than 5% of the replacement cost value of the property.”

Any lessons from the field here? Is private insurance going to leave me high and dry in an emergency? What can I do to prevent picking a fly by night company?

Thanks

Scott