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What Are Flood Insurance Waiting Periods?

Updated: Nov 10

Often, home and business owners don’t consider obtaining a flood insurance policy until it’s too late. For example, when a storm such as Hurricane Laura nears, and flood damages are likely, many homeowners start scrambling to find flood coverage. However, they soon realize they are unable to obtain immediate flood protection. This is because flood insurance policies have mandatory waiting periods between the date of purchase and the date the policies take effect. There is no coverage for claims that occur during that waiting period, but why?

The basic principle of insurance is the transfer of risk from an individual or business to an insurance company. Policyholders make smaller guaranteed premium payments to an insurance company over time, in return for financial protection from much more costly, yet uncertain events. Insurers then pool the money and hold it in reserve to pay out any claims they estimate might occur. Mandatory waiting periods for flood insurance prevent those who might delay purchasing a policy until they see trouble on the horizon, from benefiting unfairly from those who have faithfully paid their premiums in preparation for a rainy day.

Both the National Flood Insurance Program (NFIP) and the private insurance market have waiting periods in place. Those looking for a shorter waiting period might want to consider buying flood insurance from a private insurer instead of the National Flood Insurance Program. NFIP policyholders must wait 30 days for their policy to take effect, while private market waiting periods can be as short as 10 to 15 days, providing peace of mind in half the time.

There are several exceptions to the waiting periods for both NFIP and private flood policies. For example, if you’ve recently purchased a home and your lender requires you to carry flood insurance, there is no waiting period for your coverage to go into effect. Similarly, if remapping in your area determines that your property is actually in a high-risk flood zone, the waiting period is lowered to one day, as long as a flood policy is purchased within 13 months of the new flood zone determination. Notably, there is no waiting period for those replacing an NFIP policy with a non-NFIP policy provided that the premium is paid within 30 days of the old policy’s expiration.

Despite the exceptions to mandatory waiting periods, and the availability of shorter waiting periods through private insurers, it’s always best for property owners to prepare well in advance of potential disasters. Evaluate your flood risk as soon as possible to prevent costly damages from spring flooding, hurricane season, and more.

Sources:

https://www.floodsmart.gov/flood-insurance-cost/terms#:~:text=No%20waiting%20period%3A,or%20renewing%20your%20mortgage%20loan.&text=In%20the%20event%20of%20flooding,of%20the%20wildfire%2Dcontainment%20date

http://premierflood.com/flood-insurance-myths.html

https://www.valuepenguin.com/flood-insurance-waiting-periods

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