Congress passed the National Flood Insurance Act in 1968 and created a program called the National Flood Insurance Program (NFIP) to protect properties in flood zones that were not able to secure flood insurance in the private market. Through this program, single-family residences can obtain up to $250,000 in coverage and commercial properties can obtain up to $500,000 in coverage. Property owners with replacement costs higher than these limits should explore options for supplemental coverage in the private market.
The future of the NFIP is uncertain. The number of residential and commercial properties in flood zones is growing, and the government does not have the funds to continue to support this program in the long run. In fact, it was questionable as to if congress would renew the NFIP, but the President recently reauthorized the program on July 31, 2018 for a four-month period to get through this year’s hurricane season.
What is Not Covered by Excess Flood Insurance?
Just because property owners are paying for excess flood coverage doesn’t mean that they’re adequately protected when disaster strikes. Property owners should be aware that the following is typically not covered by an excess flood insurance policy:
- Personal possessions such cash, art, and jewelry as these valuable items should be removed when evacuating the property before a storm.
- Loss of rental income from an investment property.
- Basements in properties that are close to the water.
How Insurance Risk Services Can Help
With so many questions surrounding flood insurance, insurance carriers can add a lot of value by educating their clients about coverage. Our team at Insurance Risk Services has been partnering with property and casualty insurance carriers for nearly 40 years to provide them with accurate and thorough underwriting support, primarily in the form of property inspections.
When conducting a property inspection, we use the face-to-face time with insureds to make them aware of risks associated with the property and any potential gaps in insurance coverage. Flood insurance is often part of this conversation as many insureds aren’t aware that they don’t have adequate coverage in place.
Contact us at Insurance Risk Services to learn how we can help you to better serve your insureds and mitigate risk.