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10 Reasons Why Flood Insurance Is a Must-Have for Your Insureds
Written by Tyreo Harrison
June 28, 2021
Welcome to the 2021 Hurricane Season. If you’re just joining us, we’re already to “B” as tropical storm Bill brews off the coast of North Carolina. While many of us are still reeling from last year’s record-breaking season with 30 named storms, experts are predicting another above-average showing from now through November 30.We all know that flood damage is not covered by homeowners insurance. As the person responsible for securing your clients’ peace of mind by making sure their home and property are covered in an unfortunate scenario, you want to make sure your clients aren’t left out to dry when it comes to having adequate flood coverage.
In this blog post, we’ll provide helpful information that you can share with your insureds, including what the meteorologists at the National Oceanic and Atmospheric Administration (NOAA) predict for the 2021 Atlantic hurricane season. We’ll also discuss the top 10 reasons why flood insurance is a must-have for your clients in the coming wet months.
Experts Predict Above Average Activity for the 2021 Hurricane Season
Here’s what NOAA had to say in LifeScience about the 2021 Atlantic hurricane season:
“There is a 60% chance that the Atlantic hurricane season, which runs from June 1 to Nov. 30, will be an "above-normal" season…The season will likely bring 13 to 20 named storms, or storms with winds of 39 mph or higher. Of those storms, six to 10 could become hurricanes with winds of 74 mph or higher, with three to five becoming "major" hurricanes with winds of 111 mph or higher.”
Top 10 Reasons Why Flood Insurance Is a Must-Have
All federally regulated and insured lenders require flood insurance on properties located in high-risk areas to secure a loan. However, all home and business owners should consider purchasing coverage to protect their property and belongings. Here are the top 10 reasons:
Reason #1: Flood damage is not covered by homeowners insurance.
Flooding is the number one natural hazard in the United States. In addition to flooding from hurricanes, floods and flash floods occur in all 50 states. Despite this, damage from flooding is not covered under homeowners insurance.
Reason #2: Flood insurance is affordable.
Obtaining flood insurance through the NFIP is often quite affordable. However, private flood insurance companies also offer completive rates. According to Money, “77% of single-family homes in Florida would see cheaper premiums with private insurance. The same is true for 69% of households in Louisiana, and 92% of those in Texas.” You’ll want to shop around for the best rates.
Reason #3: Over 20% of flood claims don’t originate in high-risk areas.
Flood plains can change and Mother Nature is unpredictable. Risk for properties in moderate- to low-risk areas is not entirely eliminated. When Hurricane Harvey hit Houston in 2017, it left over 200,000 damaged homes in its wake and caused $125 billion in total damages. Of the houses and businesses affected by the storm, 80% were located outside of the 100-year flood plain. The vast majority of these property owners did not have flood insurance.
Reason #4: Flooding occurs more often than fires in the home.
Properties in high-risk areas are more likely to experience a flood over a fire. Hopefully, neither type of insurance product will need to be used, but with hurricane season ramping up and climate change increasing the likelihood of natural disasters, it’s best for your clients to be prepared.
Reason #5: New land development could make your property more prone to flooding.
Be aware of new land development or major construction near a home or property. These projects can create changes in natural runoff paths for water and could make your property more prone to flooding.
Reason #6: Just one inch of floodwater in your home can result in over $25,000 in property damage.
According to FEMA, a mere inch of water from a flood can come with a big price tag—to the tune of $25,000 for the cost of repairs.
Did you know? Private market flood programs are often less expensive than FEMA's National Flood Insurance Program.
Reason #7: Hurricanes aren’t the only cause of flooding.
Rain and hurricanes aren’t the only causes of flooding that could impact your clients’ property. Mudslides, winter storms, melts, inadequate drainage systems, and failed protective devices can also cause floods.
Reason #8: Federal aid can be more costly than you think.
If a property is affected by a hurricane or other declared natural disaster, any federal disaster assistance distributed by FEMA is treated like a loan with interest that must be paid back to the government.
Reason #9: You could receive reimbursement for damage prevention.
Individuals with flood insurance may be eligible to receive up to $1,000 reimbursement for taking preventative measures to protect their homes from flooding. This could include things like storage space and pump rentals.
Reason #10: Standard policies typically provide coverage up to $250,000 for homes, but excess insurance is available.
Most standard policies only provide coverage up to $250,000 for residences or up to $500,000 for commercial property. If the estimated cost to rebuild a property is higher, excess flood insurance can help cover these costs.
We live at a time when natural disasters are occurring more and more frequently. While the future may be hard to predict, you can help arm your homeowners insurance clients with the information and resources they need to protect their property in any scenario.
As Executive Vice President, Lending & Insurance Solutions, Ty Harrison leads teams of lending and insurance professionals that are dedicated to delivering value-added programs, services and technology tailored to address the needs of lenders, loan servicers, portfolio managers, mortgage brokers, insurance agents and insurance brokers.
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