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Emerging Options for Flood Insurance

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For decades, the only option most property owners had for purchasing flood insurance was the federal government’s National Flood Insurance Program (NFIP). Today, alternatives are being developed by private insurers, including (but not limited to):

  • Stand-alone flood insurance written on the basis of flood policy forms developed by the Insurance Services Office (ISO), an insurance advisory organization; and
  • Flood coverage endorsements added to property policies, often in conjunction with major reinsurers able to spread their risk internationally.

NFIP policies

The NFIP offers three different policies for different types of property:

  • A Dwelling Form for covering a primary residence, detached garage, and personal property;
  • A General Property Form for covering a commercial structure and business personal property; and
  • A Residential Condominium Building Association Policy Form for covering a condominium building, individual units, and personal property within the units.

ISO policy forms

In contrast to the government-developed NFIP policies, flood policy forms developed by ISO in 2017 and 2018 utilize provisions similar to those included in ISO-based homeowners and commercial property forms. Those forms are provided as follows:

  • Under a new ISO Personal Flood Program, which is separate from but aligned with forms and coverages available under the ISO Homeowners Program;
  • Under a new ISO Commercial Flood Program, which is separate from but aligned with forms and coverages available under the ISO Commercial Property Program; and
  • An updated ISO Commercial Property Flood Endorsement, provided as part of the ISO Commercial Property Program.

Policy endorsements

Another option is emerging in personal lines, where carriers and advisory organizations are introducing flood coverage endorsements with limits and conditions distinct from the underlying homeowners or dwelling policy.

These various approaches have many similarities but also some important distinctions. For more detailed information on these flood insurance coverage options, see the Adjusting Today report entitled “Flooding: Everyone is Exposed, Few Are Insured, But Options Entice.”