WHY SELL FLOOD INSURANCE?

Insurance agents should consider selling flood insurance for several compelling reasons:

Comprehensive Coverage: Floods are one of the most common and costly natural disasters. By offering flood insurance, agents provide their clients with comprehensive coverage that goes beyond standard homeowners insurance, ensuring protection against flood-related damages.
Filling a Coverage Gap: Standard homeowners insurance typically does not cover flood damage. By selling flood insurance, agents address a significant gap in coverage, offering clients a more complete risk management solution.
Client Protection: Flood events can lead to substantial financial losses for homeowners. Selling flood insurance demonstrates a commitment to client protection and financial well-being, helping clients avoid the potentially devastating consequences of flood damage.
Government Backing: Many flood insurance policies are offered through the National Flood Insurance Program (NFIP), which is backed by the federal government. This government support provides a level of reliability and stability in the insurance coverage offered, instilling confidence in clients.
Educational Opportunity: Selling flood insurance provides agents with the opportunity to educate clients about the specific risks of flooding in their area and the importance of being adequately insured. This educational aspect strengthens the agent-client relationship and positions the agent as a trusted advisor.
Risk Mitigation: By encouraging clients to purchase flood insurance, agents help mitigate the financial risks associated with flood damage. This proactive approach not only protects clients but also contributes to the overall stability of the insurance market by reducing the potential for large, concentrated losses.
Legal and Ethical Responsibility: Depending on the location and regulatory environment, there may be legal and ethical considerations regarding the disclosure of flood risks. Selling flood insurance ensures that agents fulfill their responsibilities to inform clients about potential risks and the available means of protection.
Enhanced Business Opportunities: Offering a broader range of insurance products, including flood insurance, can attract new clients and enhance retention among existing ones. It diversifies an agent’s portfolio and strengthens their position in a competitive market.
Community Resilience: Selling flood insurance contributes to community resilience by ensuring that homeowners are financially prepared for potential flood events. This, in turn, helps communities recover more quickly after disasters, fostering overall stability and well-being.
Professional Development: Staying informed about flood insurance options, regulations, and industry trends enhances an insurance agent’s professional knowledge. This continuous learning not only benefits the agent’s career but also positions them as a trusted expert in the eyes of clients.

In summary, selling flood insurance aligns with the broader goals of risk management, client protection, and community resilience. It not only adds value to the services provided by insurance agents but also fulfills important ethical and legal responsibilities.

WHAT DO THE NUMBERS TELL US?

While specific statistics may vary depending on the region and time frame, here are some general statistics that highlight the importance of having residential home flood insurance:

Frequency of Floods:
- According to FEMA, floods are the most common and widespread of all natural disasters in the United States.
- The National Flood Insurance Program (NFIP) states that approximately 98% of U.S. counties have experienced flooding.
Financial Impact of Floods:
- The NFIP reports that just one inch of water in a home can cause more than $25,000 in damage.
- The average residential flood claim in the U.S. is over $30,000, according to FEMA.
Flood Risk for Non-High-Risk Areas:
- Over 20% of flood insurance claims come from properties located outside high-risk flood zones, emphasizing that floods can happen in areas not traditionally considered high-risk.
Changing Flood Risk Landscape:
- With climate change, the frequency and severity of extreme weather events, including floods, are expected to increase. This underscores the importance of being prepared for changing risk landscapes.
Limited Homeowner’s Insurance Coverage:
- Standard homeowners insurance typically does not cover flood damage. Many homeowners may assume they are covered for floods, leading to potential financial hardships when a flood event occurs.
Government Assistance Limitations:
- Federal disaster assistance is often in the form of loans that need to be repaid and may not cover all losses. Moreover, it is generally only available if a federal disaster is declared, which doesn’t happen in every flood event.
Underinsurance and Uninsured Homes:
- A significant percentage of homes in flood-prone areas are either underinsured or lack flood insurance coverage entirely, leaving homeowners vulnerable to financial devastation.
Flood Insurance Participation Rates:
- The Insurance Information Institute notes that, on a national level, only about 15-20% of U.S. homeowners have flood insurance. This suggests a significant gap in coverage despite the widespread risk of floods.
Community Impact:
- Flood events not only affect individual homeowners but also have broader community and economic impacts. The recovery process is often prolonged, affecting property values and community well-being.
Increasing Property Values at Risk:
- As property values rise, the financial exposure to flood risk also increases. Protecting these valuable assets becomes increasingly important as the potential financial losses from flood events escalate.

These statistics collectively emphasize the critical need for residential home flood insurance to mitigate the financial risks associated with floods and ensure the protection of homeowners and their assets.