Louisiana Flood Insurance

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The Year 2020 was a record year for hurricanes on Louisiana shores — never in history have more storms hit during the June 1 to November 30 hurricane season. In addition to the floodwaters, high winds and storm surge back up sewage systems.

It is crucial for those who live in, or are moving to, Louisiana to understand flood insurance. When water seeps into a home, it is typically counted as flood damage.

Why Louisiana homeowners need flood insurance

According to data from the National Oceanic and Atmospheric Administration’s (NOAA) Storm Event Database, 2,510 flood events occurred in Louisiana between 1996 and 2019. The NOAA defines a flood event as the inundation of rising water into any area that is normally dry. The water can come from a river, stream, drainage system or the pooling of water from rainfall. According to FEMA, just one inch of water can cause $25,000 worth of damage to a home.

The state of Louisiana has spent billions of dollars in the last 20 years to rectify damage from hurricanes, yet many residents do not have flood insurance due to the added expense. Although flooding is a common natural disaster in Louisiana (and any coastal state), it is specifically not covered under regular homeowner’s insurance. However, there are some affordable flood protection options available.

Cost of flood insurance in Louisiana

The average yearly cost for supplemental flood insurance in Louisiana is $970.54, well above the 2018 NFIP national average of $642. Average homeowners or renters insurance policies do not cover damage from flooding. It’s a good idea to consider purchasing supplemental flood insurance to protect homes and belongings from flood damage. While rates vary, Louisiana residents can find affordable options.

In 1968, Congress created the National Flood Insurance Program (NFIP) to protect Americans. Separate NFIP flood coverage policies are available from the Federal Emergency Management Agency (FEMA) or private insurance companies. Many homeowners or renters insurance companies offer supplemental flood insurance, but the NFIP can help when there are no other affordable options available.

When to purchase flood insurance

According to the nonprofit Consumer Compliance Outlook, in 2013, FEMA changed waiting period stipulations for NFIP to 30 days unless an exception applies. It’s important to check any specific flood policy’s waiting period before purchasing. Most insurance carriers will not allow flood insurance to be purchased when a major storm is in the forecast. The recommended time to consider purchasing flood insurance is as soon as you move into a home in an area at risk for floods.

Those with mortgages on their homes also need to consider flood insurance requirements. According to the Louisiana Department of Insurance, federally-backed mortgages of property owners whose properties fall within floodplains or pose a high risk of flooding may have flood insurance requirements that can only be fulfilled by an NFIP policy.

How to purchase flood insurance in Louisiana

NFIP provides federally-supported flood insurance to homeowners and covers up to $250,000 for a building and $100,000 for building contents. It is available to anyone living in one of 23,000 participating NFIP communities. For properties valued above the coverage limits, there are excess policies available through private insurance carriers. A few homeowner’s insurance providers offer flood insurance policies for an additional cost.

Private flood insurance relies on reinsurance or money collected from premiums to cover losses, which means that premiums may be higher. However, the waiting period for flood insurance coverage to kick in may be shorter than for federally-backed programs, and limits are often higher. NFIP coverage only reimburses the depreciated amount of flood-damaged belongings, while private flood insurance covers personal property at its replacement cost.

Frequently asked questions

Does homeowners insurance include flooding coverage?

No. Typically, a separate flood insurance policy must be purchased from the federal NFIP program or through a private insurance carrier.

Is flooding insurance necessary in Louisiana?

Some areas are considered so high-risk that it is mandated when the home is purchased. It is a good idea to research the area’s requirements when a home is being purchased before closing to factor in the cost of any required insurance.

What is a surplus line insurer?

Surplus line insurers are regulated in the state in which their headquarters are located. The Louisiana Department of Insurance has a white list of surplus line insurance companies. While they must be registered with that department and meet eligibility requirements, surplus line insurers do not carry policies guaranteed by the Louisiana Insurance Guaranty. Surplus line insurers are not subject to all Louisiana policy laws, as well.