Flood is the most common peril and the most uninsured.
According to FEMA, “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.” So, why are 9 out of 10 homes not insured for flood damage?
Let that soak in. Only 10% of U.S. homeowners purchase flood insurance.
That means 90% of homeowners are left uninsured and 90% of your personal lines book is a cross-sell opportunity. These are the best leads to bring in extra revenue and protect yourself against a potential E&O claim.
You might be thinking “what does she mean to protect me from an E&O claim?” Well, most clients think flood is included in their homeowner’s policy. Clients may not understand that homeowner’s and renter’s insurance typically exclude flood damage.
If you have taken one of my E&O risk management courses, you know that E&O claims are a result of an uncovered loss. Clients who have a flood event and are presented with a large repair bill and then realize they are not insured increase the chances the agent will face a lawsuit. Failure to recommend coverage is of the top three reasons agents are sued by their clients.
So, how can you sell more flood and protect yourself against an E&O claim at the same time?
First Educate Yourself and Staff
Educate yourself on flood insurance so you understand the coverage. OIA hosted Nina Do, Selective Insurance flood expert, on our Webinar Wednesday series earlier this year. Nina went in-depth into the NFIP (National Flood Insurance Program), offering through their National Flood program. It is a quick one-hour session that provides a lot of great information about flood insurance and the NFIP program. You can access the webinar recording now.
Selective Insurance is the endorsed carrier for Big I National and as a member of OIA, you also have access to Selective and their flood resources available through our affiliation with the Big I.
It is not just access to the NFIP, Selective also offers private insurance for those not in a high hazard area and excess coverage for those that need more than the limits offered by the NFIP.
Big I Flood provides you with marketing information that you can customize with your agency logo and will help you with education of the products. To access Big I Flood, click here https://www.independentagent.com/flood
Make Flood a part of quoting process
Offer flood insurance to all existing clients and all new business opportunities. Make it a part of your renewal and new business quoting process. As I mentioned, 90% of homeowners are not insured for flood coverage. If it is not required by the lender most think they don’t need to purchase flood. In the past three years, 40% of flooding happened outside of the SFHA (Special Flood Hazard Area) or the high-risk zone.
The average damage caused to a 2,500 square foot home with 1” of standing water is $27,000. Most homeowners are self-insuring this cost and it puts a financial strain on them to pay this out of pocket. You can use these statistics to educate your clients on the high cost of self-insuring flood damage and the likelihood it could happen. Since 1996, 99% of counties in the US have sustained a flood event. That is basically every county.
Protect your Agency
Documentation, consistency, and procedures are critical and provide the best defense in a claims situation. Be sure to get in writing from your client or prospect if they do not wish to purchase flood insurance. Lack of documentation creates he said, she said scenarios.
Just because an E&O claim was made against you does not mean the agency did anything wrong or breached your legal duty. But without good procedures and documentation, you may not be able to prove that you did not do anything wrong.
There is no seasonality to selling flood insurance. If you incorporate this into your quoting process you will be selling flood all year round. This will not only help increase revenue but will help protect your bottom line if a claim were to surface due to lack of flood coverage.
If you have questions, please reach out to your seasoned E&O professionals.