Spring is here and flood has been top of mind in the insurance world. Last week, I wrote an article “2020 Opened the Flood Gates for a Record-Breaking Year”. And yesterday I hosted our partner Selective on our Webinar Wednesday series to discuss their national flood program affiliated with OIA and Big I National. Today I want to talk about how agencies can sell more flood insurance and protect themselves against potential E&O claims.
Both in my last article and on the webinar, we discussed the fact that flood is the most common peril and the most uninsured. Nine out of ten homes, 90% of homes are not insured for flood. That means, 90% of your personal lines book is a cross-sell opportunity. These are the best leads to bring in extra revenue and also protect yourself against a potential E&O claim.
If you’ve 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. If you didn’t have a chance to join our webinar this past Wednesday, April 14th you can access the webinar recording now. Nina Do, Selective Insurance flood expert, goes in-depth into the NFIP offering through their National Flood program. Selective 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 Big I.
It’s not just access to the NFIP ( National Flood Insurance Program), 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’s 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’s 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 don’t wish to purchase flood insurance. Lack of documentation creates he said, she said scenarios.
Just because an E&O claim was made against you doesn’t 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 didn’t do anything wrong.
Spring isn’t the only time to sell flood insurance. If you incorporate this into your quoting process you will be selling flood all year round. This will not only help with your bottom line 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.