Defining Flood and Water Damage for Your Customers

Posted by: Agent Hub

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For homeowners, experiencing an extreme loss from water or flood damage is difficult already without having to worry about whether or not their insurance policy covers the damage. That’s where you come in. As an insurance agent, your clients depend on you to help them wade through the difficult times caused by unforeseen events. These tips will help you better define flood and water damage to your clients, as well as determine what coverage is right for them.

What Is Considered a Flood? How Is Flood Risk Calculated?

According to the National Flood Insurance Program, a flood is a “general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow.”

Flood risk is determined by many factors beyond flooding history. Weather patterns, natural changes in the environment as well as community development are also taken into consideration when evaluating flood risk.

Understanding Flood Risk

As an insurance agent, it is important that you help your clients understand their flood risk. Flood risk is divided into three categories: high-risk, moderate- to low-risk, and undetermined risk areas. High-risk areas are areas where there is at least a 1 in 4 chance that flooding will occur during a 30-year mortgage. Home and business owners in high-risk areas who have mortgages from insured or federally regulated lenders are required to purchase flood insurance. Moderate- to low-risk areas essentially mean the risk of flooding is reduced, but not entirely removed. Flood insurance is not required for home and business owners in these areas. Undetermined risk areas include areas where flooding is possible but ultimately undeterminable.

Residential, Condo and Renters Coverage

Because every client’s home, property and assets are different, it can be challenging to determine what coverage is best for them. Factors like property location and flood risk will ultimately influence a client’s insurance premium. Homeowners in moderate- to low-risk areas may be eligible for coverage at a preferred rate — and although flood insurance isn’t legally required for homeowners in these areas, everyone can be financially vulnerable when it comes to flood. For homeowners in high-risk areas, a standard rate policy is required, which offers separate building and content coverage.