Flood insurance is a vital part of a well-rounded risk management strategy, especially for clients in flood-prone areas. To help clients make informed choices and ensure they’re protected, independent agents should stay updated on the latest developments. Focus on these five critical areas to better serve your clients.
- Monthly Payment Options Are Coming to NFIP
Starting December 31, 2024, the National Flood Insurance Program (NFIP) will offer policyholders the option to pay their annual premiums in monthly installments. This change aims to make flood insurance more accessible by reducing the upfront financial burden. Let clients know about this new flexibility, and be prepared to guide them if they choose to switch to monthly payments. - Waiting Periods for Coverage Activation
Clients often assume that flood insurance takes effect immediately upon purchase, but NFIP policies generally have a 30-day waiting period before coverage begins. There are exceptions, such as when flood insurance is bought in conjunction with a mortgage or due to a recent flood map change. Clarifying these waiting periods is key to setting the right expectations. - Evaluating Coverage Limits and Considering Excess Flood Insurance
The NFIP caps building coverage at $250,000 for residential properties and $500,000 for commercial ones. For clients with high-value properties, this may not be enough. Agents should review clients’ needs and consider recommending an excess flood insurance policy from private insurers to make certain they’re fully protected. - Limitations of Standard Homeowners Insurance Policies
Many clients mistakenly believe that flood damage is covered under a standard homeowners policy. In reality, most homeowners policies exclude flood-related losses. Agents must make this clear and stress the importance of separate flood insurance coverage to protect against flood-specific risks. - The Importance of Flood Insurance Beyond High-Risk Zones
Flooding can occur outside of high-risk areas, and a significant number of flood insurance claims come from moderate- to low-risk zones. Encourage all clients, regardless of their location, to consider flood insurance as a safeguard against unpredictable flooding events.
Helping clients understand these key aspects of flood insurance reinforces your role as a trusted advisor. By proactively addressing potential gaps and ensuring they are well-informed, you provide invaluable support in protecting their financial future.