Floods can happen in any home — even those that don't lie close to bodies of water. Yet, the risks of flooding are higher in flood-prone areas. That's why, in many homes, there exists a considerable need for flood insurance. If you are an insurance agent, you have to make sure at-risk property owners not only insure their homes with standard homeowners protection, but also with flood coverage, if necessary. In some cases, coverage is even a requirement. Here are a few tips on how you should explain flood insurance to your clients.
Flood insurance often is an important part of coverage for homeowners across Texas. However, how they go about getting protection for water damage might vary. It's your job, as their insurance agent, to tailor coverage to their satisfaction.
Water Damage Within Homeowners Insurance
When someone buys a homeowners insurance policy, they want it to protect them against the costs of unexpected or unavoidable home damage. That's why most homeowners insurance policies will cover damage related to fire, wind, lightning and other types of severe weather. However, what a homeowners policy might explicitly exclude is water damage caused by weather-related flooding.
This isn't true in all cases, however. For example, if water damage to the home results because a tornado damages the roof and rainwater leaks in, then homeowners insurance might cover the damage costs. The cause of the damage was related to a tornado, and windstorms typically are covered perils on most policies.
Other types of water damage might also have coverage. Water damage from mechanical malfunctions is often covered by a homeowners insurance policy. So, if a pipe bursts in the home, causing an in-house flood, then a homeowner's policy might pay for the damage. In some cases, such as sewer overflows or sump pump backups, you might have to add special endorsements to the policy.
All the same, you should carefully review with your clients the types of water damages their home insurance will and will not cover. One thing to impress on them is this: Standard homeowners insurance will not cover most weather-related home flooding.
So, in cases like flash flooding, river swells or storm surge, your clients' homeowners policies likely will not be able to help them in any way. Only a specific flood insurance policy. might be able to provide the relief they need during these often-devastating occurrences.
Flood Insurance's Added Benefits
Just an inch of water in someone's home could cause thousands of dollars in damage. Just a few of the results might be:
- Structural damage due to saturation of flooring and drywall
- Damage to electrical systems
- The growth of mold, fungus or mildew
- Pest invasions by water-borne species
- Damage to possessions within the home
It's easy to see just how quickly someone's repair bills might rise in the event of a flood. But, if your client doesn't have flood insurance to protect them, then they might have no resources to help as they try to pick up the pieces. All the same, if they get a flood insurance policy, they might be able to cover many of these losses.
What's In Flood Insurance?
Flood insurance exists separately from homeowners policies. Part of the reason for this has to do with the way flood risks affect some homeowners differently than others.
Therefore, the United States government designed the National Flood Insurance Program (NFIP). While there are private insurance policies out there, it is the NFIP which provides the bulk of flood insurance policies to Americans today.
NFIP policies usually offer the following benefits:
- Structure Insurance: Policies will provide up to $250,000 in coverage for the home itself.
- Possessions Coverage: You'll be able to get up to $100,000 for your belongings.
The good news about flood insurance policies is that they can cover a wide variety of your possessions and different parts of your home. You'll have coverage for the house and its foundation, major utilities within the home, numerous permanently-installed furnishings and detached structures.
Usually, clients must buy the structure coverage first, but they can add the possessions coverage optionally. We always recommend you buy possessions coverage.
Do Clients Have To Buy Policies?
In many cases, your clients will have a requirement to buy flood insurance. Some people live in high-risk flood zones, meaning that they have significant chances of experiencing a home flood. NFIP rules might force their mortgage lender to require them to buy coverage. Other policyholders can buy coverage, though they might have to verify that their community participates in the National Flood Insurance Program to qualify for an NFIP-supported policy.
Your goal should be to make sure your clients understand both the advantages and limitations of flood insurance. To those who need coverage, these policies can be lifesavers. With your help, policyholders will be able to be certain their policy will work alongside their homeowners insurance policies in all situations.
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