Factors that Influence Clients’ Flood Insurance Premiums

Flooding can be incredibly disastrous for both homeowners and business owners – sometimes, devastatingly so. It is the most expensive natural disaster in the United States, costing the government, insurers and homeowners billions of dollars every year.

Without adequate flood coverage, your clients are risking financial disaster. One flood of their home and they could be completely ruined. Flood insurance coverage isn’t required by federal law, but it is essential, especially if your customers live in coastal cities or near large bodies of water.

What types of factors can affect a client’s flood insurance premiums?

  • Year of building construction. The premium on a house that has been through a flood during its lifetime will be higher. Newer houses tend to have little to no history of flooding, while older houses are likely to have been through a flood or two over the years.
  • Building occupancy. The type of occupancy for a structure determines not only which coverage type is needed, but also the amount of coverage that is possible. Naturally, different dwelling types will have different premium amounts.
  • Number of floors. If the dwelling/building has a basement, or if the lowest floor is not above the ground level it will likely result in higher premiums.
  • Location of its contents. Whether valuable property is stored above or below flood levels can affect premiums. Coverage for belongings stored in the basement is often limited.
  • Flood zone type. Homes in higher risk areas will have higher premiums.
  • Location of the lowest floor in relation to the base flood elevation on FEMA flood map.
  • Deductible and amount of building and contents coverage. The higher the deductible, the lower the premiums. The opposite is true of building and contents coverage – the more coverage, the higher the premium.

Flood Insurance: A Necessity

Basic homeowners insurance usually covers water damages from plumbing issues, but does not cover damages caused by water that has come in contact with the ground outside. For example, if a hurricane pulls the roof off and some rain gets inside and damages the interior of the home, it may be covered under the basic homeowners insurance. However, if the nearby river rises above its bank, or a city water pipe bursts in the street and floods the front living room, or a storm surge rises about 9 feet tall causing significant flooding in nearby homes, that damage is only covered by a flood insurance policy.

Flood insurance will NOT cover:

  • Finished basement damage. Anything below-ground that would be considered “cosmetic improvement” is not covered – unless special endorsements or riders are purchased.
  • Living expenses. Alternative living arrangements when a home is damaged and declared unlivable are not covered. Additional coverage options can be purchased for this need.
  • Preventable mold/mildew damages.
  • Vehicles.

Floods can happen anywhere, even in homes not in a known flood plain. Pipes can burst, rain can fall, dams can be broached. Make sure your customers are covered, no matter their location.

About Wilmington Insurance Agency

Wilmington Insurance Agency delivers comprehensive coastal property solutions. We are a Managing General Agency and provide independent insurance agents with property and liability insurance solutions for residents and businesses primarily in Maryland and Virginia. We work alongside our sister company, Wilmington Insurance Company, established in 1996 and providing Property & Casualty commercial lines business, homeowners, and condominium insurance in the state of Delaware. To learn more about how we can help you to expand your book of business in the coastal market, contact us at (302) 231-2800.