New England Insurance Agent Blog

Insurance agents: Do your clients have flood insurance?
/ Categories: Risks

Insurance agents: Do your clients have flood insurance?

In his article -- Why don’t property owners have flood insurance? -- Gregory Knuffke notes that according to the National Academy of Sciences, climate change and increased coastal urbanization mean that flood damage is expected to double every decade for the rest of the century. With that being the case, he asks why less than 7% of homes and half of high-risk properties are insured against flood?

His article offers a good snapshot of the risk and the current state of flood insurance, including public misconceptions that stand in the way of coverage and the limitations of the National Flood Insurance Program (NFIP). He points to coverages that are available through homeowners that are not part of NFIP coverage, leading to dissatisfied clients when they file a claim and learn the coverage deficiencies: think "no provision for additional living expenses," for one. Knuffke offers a side-by-side comparison between homeowners and NFIP. He also talks about the emergence of private and specialty flood insurance alternatives.

Regardless of the plan, Knuffke quotes Keith Brown, CEO of Aon National Flood Services:

“Every time an agent writes a homeowner’s policy, they should be quoting flood insurance,” said Brown. With WYO programs now available to many agents and brokers, writing and issuing flood policies is much easier than it was previously.

“By offering flood coverage at the point of the homeowner sale, in addition to offering protection to your clients from devastating losses, you’re also helping to protect yourself from potential errors and omissions claims,” said Brown.

Knuffke points out that putting the onus on the insureds to decide whether they wish to purchase via a waiver form similar to uninsured/underinsured motorist coverage does two things: it offers value to the client and reduces agent E&O exposure.

Related: I live in a low-risk flood zone. Do I really need flood insurance?

"Even though flood insurance isn't federally required, anyone can be financially vulnerable to floods. In fact, people outside of mapped high-risk flood areas file over 20-percent of all National Flood Insurance Program flood insurance claims and receive one-third of Federal Disaster Assistance for flooding. When it's available, disaster assistance is typically a loan you must repay with interest. A Preferred Risk Policy provides both building and contents coverage for properties in moderate- to low-risk areas for one low-price. "

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