Flooding caused by hurricanes and tropical storms can wreak havoc along the Eastern Seaboard and Gulf Coast from June through November. However, that flood risk is not limited to summer and fall months alone, nor to just the East Coast and Southeast.
Winter and spring rain, plus snowmelt — both common occurrences — are often overlooked as significant flood threats, despite causing millions of dollars in property damage year after year. That threat is compounded by the potential danger of levee failure along rivers, tributaries and waterways. For millions of residents all across the country, flooding is an ever-present risk.
Recent western floods
History reminds us how severe the danger of flooding can be. Most recently, in April, the Federal Emergency Management Agency pledged more than $4.4 million to assist Oregonians with recovery following damage from severe winter storms and flooding. Two months earlier in February, President George W. Bush signed two federal disaster declarations for severe winter storms, flooding, landslides and mudslides in Washington and California. And, last year, storms, flooding, landslides and mudslides wreaked havoc in other areas in the West, the damage from which homeowners and businesses are still recovering. Washington alone suffered an estimated $36 million in damage. Arizona used nearly $3.2 million in disaster aid to recover from monsoons that hit the state in July and August 2006.
Millions still unprotected
Already several severe winter storms and blizzards have impacted Colorado, Kansas and Nebraska, setting the stage for future flood risk as snows melt and spring rains move in over the next several months. Meanwhile, the Federal Emergency Management Agency is redrawing its flood maps in areas across the country, expanding areas designated as 100-year flood protected. Property owners near levees, such as around Sacramento, Calif., will no doubt be affected by any new flood maps, potentially increasing their need to have their mortgages backed by the purchase of federal flood insurance.
Special Flood Hazard Area (SFHA) properties — those at the highest risk of flooding — receive such designation because historical records, hydrology and hydraulics show that significant floods have occurred in the region and will occur again. Lending institutions require flood insurance to protect collateral interests that are located in SFHAs, as a condition of granting mortgage loans. Property owners are also advised to protect their financial interests.
According to a 2006 RAND Corp. study, 50 to 60 percent of the 3.6 million single-family homes in SFHAs are required to buy flood insurance from the National Flood Insurance Program (NFIP). However, just 20 percent of homeowners living in the most flood-prone areas buy federal flood insurance when they are not required to do so. Only about 1 percent of Americans living outside flood zones buy federal flood insurance, according to the study, even though they sometimes become flood victims as well.
The West and South are slightly ahead of the rest of the nation, in that 60 percent of those in SFHAs purchase flood insurance. Nevertheless, too often, residents underestimate the likelihood of being affected by the No. 1 natural hazard in the United States, and statistics further illustrate the danger. A home in a SFHA has a 1 percent chance of experiencing flooding in any given year, Rand’s report indicated. In communities subject to coastal flooding, about 63 percent of homeowners purchased flood insurance, compared with 35 percent of homeowners in areas subject only to river flooding. Rand indicated the disparity might be because of lower perception of risk in inland areas, but the report recommended policymakers examine the reasons why flood insurance is less attractive to those who face river flooding.
Regardless, based on those figures, it appears there are more than a few property owners and renters in America that can benefit from a flood insurance policy. And it’s not too late to offer protection to customers who are uninsured against flood damage — particularly those who live in a SFHA.
What to do to sell flood coverage
If agents haven’t already done so, they should learn the ins and outs of flood insurance before their clients ask for assistance. Unlike most standard homeowners policies, flood insurance covers property losses caused by flooding. A policy covers structural damage; furnace, water heater and air conditioner; flood debris clean up; and floor surfaces such as carpeting and tile.
Additionally, contents coverage financially protects the contents of a building or structure, including such items as furniture, collectibles, clothing, jewelry and artwork. Visit www.fema.gov/business/nfip/manual.shtm to download the Flood Insurance Manual and view a list of structural damage and/or contents items.
Flood insurance is available to homeowners, business owners and renters in the 20,000 communities that participate in the NFIP. The NFIP’s coverage limits can insure property up to $250,000 for residential building coverage and $100,000 for contents; $500,000 for nonresidential building coverage and $500,000 for contents. The average flood insurance policy costs about $500 annually and the lower-cost Preferred Risk Policy (PRP) starts at $112 a year, offering coverage to residents who are located in low- to moderate-risk areas.
It is important to know there is generally a 30-day waiting period from the time a flood insurance policy is purchased to when it goes into effect. That is why now is the time to reach out to current and potential customers — especially those within a SFHA — and educate them about the importance of flood insurance. Now is also the time to evaluate business coverage, since protecting a place of employment should not be neglected.
Agent resources
Flood insurance is easier to write than most people think. It is a critical companion to homeowners insurance, and there is an opportunity to make a difference. The NFIP’s FloodSmart Campaign offers resources and programs to help agents market and sell flood insurance.
The Web site developed for agents, www.Agents.FloodSmart.gov, includes an array of information designed to help agents take advantage of everything the FloodSmart Campaign provides. By registering on the site, users have access to tools and resources to maximize flood insurance policy sales. The Agents.FloodSmart.gov site also puts a range of information at a person’s fingertips, such as the latest flood insurance product updates, newsletters, talking points, training classes (both in-classroom and online), tips for increasing visibility as a flood expert, local flood map change alerts and the free Agent Co-Op and Referral programs.
Agent co-op program
Agents are eligible for the Agent Co-Op Program, which is designed to help them plan and execute their own local advertising campaign and makes their advertising dollars go farther. The program provides advertising tools and downloadable templates to expand a flood portfolio — and provides reimbursement for a portion of advertising costs. By completing a state-approved flood insurance continuing education course, trained agents are eligible for an additional 25 percent reimbursement. Agents can take advantage of this program to maximize their marketing efforts.
Agent referral program
By registering at www.Agents.FloodSmart. gov, agents will become enrolled in the Agent Referral Program, which provides qualified leads to grow flood business. The program connects enrolled agents to customers in the same area who are ready to speak with an agent about their flood insurance needs. When prospective customers learn about potential flood risk and get policy cost estimates through FloodSmart.gov, they can also be connected with a local agent.
The need to help Westerners protect their financial assets with flood insurance is something agents can bring to the attention of your friends, neighbors and customers. The NFIP has created a range of resources to help make selling flood insurance easier. For information, call 800-427-4661.
Topics Agencies Flood Property Homeowners
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