Flood insurance is crucial, as nature's unpredictability can quickly turn calm areas into flood zones, especially with shifting climate patterns and more frequent extreme weather events. No doubt we will revisit Hurricane Katrina as its 20th anniversary looms this fall, and it's a devastating reminder of nature's power. Meanwhile, recent floods in Kentucky, the Carolinas and Texas highlight the universal threat of flooding, underscoring the need for vigilance and preparedness.

Whether it's heavy rainfall, storm surge or flash flooding, those who have experienced unexpected losses without adequate coverage find it difficult to recover. Our goal is to ensure that people are aware of the available coverage options to protect themselves effectively.

Flood Risk: It's About Location First

While fires can often capture our attention as major events, the reality is that floods are more common and pose a higher likelihood of loss. Often, the decision to purchase flood insurance is driven by loan requirements rather than a genuine assessment of risk, leaving many vulnerable to the financial and emotional turmoil from floods. Recognizing and protecting against the often-underestimated threat of floods is essential. Be open to difficult discussions with clients to address their real flood exposure. It's important to evaluate whether this risk is significant for them and worth considering in their coverage plans.

Location is key in determining flood insurance needs, because flood risk varies based on geographical factors. Properties in high-risk flood zones, near water bodies or in low-lying areas are more prone to flooding — but no area is exempt from flood risk. Regions with heavy rainfall, hurricanes or poor drainage systems also face increased risks. Risk can even vary from block to block in the same community.

Understanding these location-specific factors helps in making informed decisions about the necessity and extent of flood insurance coverage.

Navigating the Waters: Private Flood Insurance

Flood insurance comes in two forms: the government-backed National Flood Insurance Program (NFIP) and customizable private policies, each offering unique coverage for flood risks.

  • NFIP provides flood insurance to property owners in participating communities, promoting floodplain management and risk assessment to mitigate flood impacts. However, NFIP has certain limitations, prompting the need for private insurance solutions.
  • The private market offers more substantial and customizable coverage with higher limits, including accounts with flood coverage upwards of $200 million in some cases. Private insurers can provide primary ground-up coverage or extend beyond NFIP limits, offering broader protection that includes business income coverage.

With options to navigate and customizable policies available, the expertise of wholesalers and brokers is essential to tailor coverage to individual needs.

Benefits of NFIP Coverage
  • Wide availability
  • Standardized coverage
  • Reliable federal government backing
  • Affordable and subsidized premiums
  • Community participation in management
  • Coverage for all zones
  • Established claims process
Benefits of Private Flood Coverage
  • Higher coverage limit
  • Flexible terms
  • Broader coverage
  • Replacement cost coverage
  • Additional living expenses
  • Business interruption coverage
  • Tailored policies
  • Competitive pricing
  • Shorter or no waiting period

Take Action

Wholesalers are playing an increasingly critical role in connecting insurance carriers with retail agents to address unique flood risks. RPS flood professionals help streamline the complex underwriting process by navigating private insurance and NFIP options, considering flood zones, historical data and reinforcing mitigation practices.

Taking proactive steps can significantly enhance your chances of protecting your people and property.

  • Identify your flood zone: Understanding your flood zone is a complex process that can get technical. Leverage Federal Emergency Management Agency (FEMA) maps and carrier models, as both offer insights into complex flood risk assessments.
  • Manage flood risk: Mitigation practices may vary for each building, influenced by its blueprint and specific location factors. Using temporary flood walls, elevating structures, moving materials to higher floors and engineering alternatives are some of the top solutions to help protect your property.
  • Communicate with underwriters: Insurers will evaluate your flood plans when assessing the risk of your property. Be ready to provide information on flood maps, topography, structural details, any existing warning systems, mitigation and action plans, as well as your property's past loss history.
  • Navigate coverage options: Wholesalers and brokers tailor customizable policies to individual needs. With flexible terms in private flood insurance, policyholders should review coverage specifics carefully due to varying details and exclusions.
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