Monday, August 27, 2018

Flood Insurance Liability Issues for Real Estate Professionals

As real estate professionals, you already inform your clients when flood insurance will be lender-required for closing. But what about when flood coverage isn’t mandatory?

Eighty percent of homes flooded during Hurricane Harvey were not protected by flood insurance. As those devastated by the damages sought help to recover, many homeowners wondered how this could have happened. They pointed to the fact that their realtors, lenders, and builders had assured them at the time of closing that they “didn’t need flood insurance”. And then the lawsuits ensued.

The National Flood Insurance Program’s (NFIP) risk mapping system has failed to keep up, with both risk assessment technology, and with the sheer volume of communities that need to be remapped. Many communities throughout the nation are 20-30 years overdue for revised flood mapping. At this time, FEMA’s flood zone maps are just not an accurate predictor of flood risk.

Here’s the good news: homes in the NFIP’s low-to-moderate risk zones can be protected against flooding for premiums of $450 per year or less. That’s $1.23 per day. By contrast, just one inch of water in a 1,500 sq ft home costs an estimated $14,250 in damages. Foregoing flood insurance is just not worth it, especially here in Florida.

At Viera Insurance Agency, we offer flood coverage three ways:
  1. NFIP (FEMA) policy: $450 per year or less for low-to-moderate risk zones
  2. Private policy: Usually lower premiums and better coverage than the NFIP
  3. Endorsement to the homeowners policy: Several home insurers are now offering optional flood coverage. The cost to add flood to a homeowners policy could be as little as $100 per year.
Here are some talking points to help you inform your clients about flood risk:

  • Floodwaters don’t stop at a line on a flood map. You may not be required to buy flood insurance, but you should consider financially protecting your new home.
  • Almost 25% of flood claims come from homes outside of high-risk flood areas. This doesn’t include flood-damaged homes that have no coverage, and can’t file a claim.
  • FEMA disaster assistance is a loan that must be repaid with interest, and is not a substitute for flood insurance.
  • Talk to your insurance agent about options for flood insurance, even if coverage is not lender-required.
You’ve worked hard to build your business, and you care about your customers. Protect yourself and your clients by recommending flood insurance. Call us at 321-259-2228 with any questions.


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