“Do I Really Need Flood Insurance?”

Floods are the nation’s most common and costly natural disaster and cause millions of dollars in damage every year. Floods cost America, on average, $8.2 billion each year (according to 2015 data). Whether people end up having to repair or replace their building and or its contents from just one inch or several feet of flood water in your home or business, recovering from flood damage is expensive!

Most homeowners’ and renters’ insurance policies do not cover flood damage, so it is important to talk with your clients to explain what flood insurance policies cover. As an insurance agent, you can help them understand why flood insurance is an important asset to their financial security.  If they don’t already have a flood insurance policy, you can help them buy providing a quote.

What’s Covered?

The cause of the flooding matters. Damage caused by a sewer backup is only covered by flood insurance if it’s a direct result of flooding; the damage is not covered if the backup is caused by some other problem.

Contents and building coverage are purchased separately (for the Preferred Risk Policy, there’s an option for combination coverage for both contents and building coverage), but there are always separate deductibles. Unless your insured has contents coverage, flood-damaged contents are not covered.


Deductibles apply separately to building and contents with different options available.  As with other insurance plans, a higher deductible will lower the premium but will also reduce the claim payment, meaning insureds will need to cover the difference out of their own pocket. Sometimes a mortgage lender will set a maximum amount for the deductible.

Some People Have to Buy Flood Insurance

Homes and businesses in high-risk flood areas with mortgages from federally regulated or insured lenders are required to have flood insurance. While flood insurance is not federally required if people live in a moderate- to low-risk flood area, their lender may still require them to have insurance.

If your insureds live in a high risk flood zone and they have received federal disaster assistance in the form of grants from FEMA or low-interest disaster loans from the U.S. Small Business Administration (SBA) following a Presidential Disaster Declaration, they may be required to maintain flood insurance in order to be considered for any future federal disaster aid.

Want to know more about flood insurance? Check out our Flood Insurance Made Simple continuing education course found in our Insurance Continuing Education Course Catalog.

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