Everyone is at risk of flooding, but as an agent, it's important to understand how much risk your clients' homes could potentially face. As you probably know, consumers can find out if a property is at low, medium, or high risk on the Federal Emergency Management Agency (FEMA) site. So where do they fall on the Flood Zone Map and what kind of flood insurance coverage do they need for their home and belongings?
The map is divided into zones that are used to help determine policy rates. Although federal loans do not require flood insurance outside of FEMA's designated Special Flood Hazard Areas (A & V zones), it is recommended that agents consider offering flood coverage to all property owners. According to the Texas Floodplain Management Association, approximately
25% of all flood damages occur in low-risk zones, commonly described as being “outside the mapped flood zone.”
Other Flooding Risk
Just because your clients may not live in a high-risk zone does not mean they are completely safe from flood damage. Flooding can occur from poor drainage systems, storms, melting snow, neighborhood construction, and broken or damaged water lines.
Flooding is among the most frequent and costly of natural disasters. Even those who carry a flood policy on their home or business, may be surprised to learn that sufficient funds to repair, rebuild, or replace contents may not be available with a standard flood insurance policy. Just one inch of water in a home can cost more than $27,000 in damage. Most homeowners have standard coverage through the government-funded National Flood Insurance Program (NFIP) from FEMA.
In recent years, more homeowners have opted to purchase coverage with private insurance entities due to the lack of policy options, and are finding the coverage offered through NFIP is too low. Most standard flood insurance policies that protect properties located in areas participating in the NFIP typically only provide coverage up to $250,000 for residential property, with a maximum content coverage of $100,000. Private flood insurance can offer a higher level of coverage for homes and belongings that exceeds standard plans offered through the government-funded program.
The Real Risk of Flooding
If a home is destroyed in a flood, the insurer will reimburse for the cost of rebuilding the house to the way it was before the damage occurred. Water damage costs—not including the contents of the home—is calculated based on the square footage of the structure, the amount of water, and the cost of labor to cleanup.
*Chart above based in amount of water in a 2,500 sqft home.
According to Verisk, total reconstruction costs, including materials and retail labor, rose 7.2 percent at the national level in the United States from January 2021 to January 2022. It is wise to advise your clients to obtain coverage based on how much it would cost to rebuild the physical structure of the home, surrounding structures, and personal contents of the home. Thankfully, a licensed appraiser will be able to generate a cost estimate with their expert experience and tool to ensure your clients’ home replacement needs are met.
Coverage for Your Clients
With zero production commitments, direct access to our dedicated flood underwriters, and market-leading revenue opportunities, SWBC is the clear premier flood coverage option. SWBC has the ability to offer private flood insurance focused specifically on risks falling outside the NFIP-excess layers and primary coverage for properties located in CBRA and NPC zones. As property values continue to soar, excess coverage above and beyond the NFIP becomes more relevant than ever.
Work with SWBC to help your clients gain the flood protection they need. Become a registered agent, and begin offering SWBC Flood Insurance today.
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