New Texas Homeowners Policy Includes Flood Coverage

12 Apr

Texas homeowners may have a new option when it comes to flood insurance. While flood coverage is always excluded from a standard homeowners policy, the Woodlands Insurance Co. which is located in Woodlands, Texas is offering a Texas homeowners policy that includes flood insurance coverage to all households that qualify. 

The coverage can vary depending on the policy you end up choosing. Woodlands is offering tiered coverage levels with Twico Prime, Twico Prime Plus, and Twico Prime 360. Coverage levels vary between the baseline of $5,000 in flood coverage up to full replacement coverage. 

In addition to flood coverage, Twico is offering identity theft, service line, home cyber protection and home systems endorsements. 

“Our area has suffered three major flooding events in the past two years, beginning with the Tax Day and Memorial Day floods in 2016 and followed up by the historic Hurricane Harvey in 2017, Gordy Bunch,” founder and chairman of The Woodlands Insurance Co., said in the company’s announcement. 

“In responding to these tremendous events, it was disheartening to see so many people affected without coverage. Hurricane Harvey is second to Hurricane Katrina on the total losses paid out from the National Flood Insurance Program. Hurricane Ike (2008) and Tropical Storm Allison (2001) are included on the top 10 Most Significant Flood losses, this highlights the need for Texas Homeowners to obtain flood insurance,” Bunch continued.

Flood Insurance is Necessary

Flood insurance can be a financial lifesaver if your home is damaged or destroyed by flooding. In the past, most homeowners have had to carry a separate flood insurance policy and in many cases these were purchased via the National Flood Insurance Program (NFIP). 

The NFIP is a government run insurer that underwrites flood insurance in areas where it is difficult to find coverage in the private market. However, there are limits to NFIP policies. Coverage levels are capped at $250,000 for the structure and $100,000 in personal property coverage. This means that if your home will cost more than $250,000 to rebuild, you will need to find supplemental coverage in the private market.

Costs for flood insurance can vary dramatically depending on where the property is located. NFIP data shows that the average premium for a low-risk property is around $450 a year and can quickly jump into the thousands of dollars a year for more risky properties. The average NFIP premium for a policy in 2018 was $1,062.

Private market flood insurance usually comes with higher coverage limits but also a higher price. The majority of flood insurance policies come with some type of waiting period so it is not a good idea to wait until a flood is on the way to purchase coverage. NFIP policies do not kick in for 30 days and even private market policies will usually come with at least a 10-day waiting period. 

Tips for Buying Flood Insurance 

Here are a few tips for buying a flood insurance policy:

Buy Before a Flood: This is very important as flood insurance policies come with a waiting period. It can vary between 30 days down to about 10 days but almost all flood insurance policies have a waiting period so waiting until a storm is on its way will leave you unprotected and you could end up on the hook for all repair costs. 

Shop Around: It always pays off to shop your Texas homeowners insurance coverage on a regular basis. This is especially true for flood insurance. Insurers rate risk differently so premium quotes can vary dramatically. Be sure to compare a NFIP policy with a private market policy such as the new Woodlands homeowners policy. 

Replacement Value Policies Are Best: Flood insurance policies, like all insurance policies are sold in both replacement value and actual cash value. A replacement value policy will be a bit more expensive but it is well worth the additional cost. 

A replacement value policy will replace your belongings with an item of the same value and quality while an actual cash value policy takes depreciation into account. 

Tags: , , , ,