Now What High Home Prices Mean for Your Clients’ Flood Insurance Needs


This publish is a part of a sequence sponsored by SWBC.

Within the final two years, many owners have seen the worth of their properties skyrocket. Between 2019 and 2020, the median value of a house solely rose by $20,400, however between 2020 and 2021, it rose by $40,200. From 2021-2022, they rose over $46,700, bringing the median residence value to $357,300.

The common price ticket for newly listed properties, which had plateaued round $389,400 in 2019, shot as much as greater than $443,200 in August of 2021. Common new residence costs have risen by 13.5% since March 2021 and 26.5% in comparison with March 2020.

How do rising residence values impression your insureds? For one factor, if the worth of their residence has risen considerably within the final couple of years, their customary flood insurance coverage policy might now not provide ample safety for his or her wants.

Floods are the most typical kind of pure catastrophe that strikes owners within the nation. In line with FEMA, only one inch of floodwater in a house could cause over $25,000 in property harm! Regardless of this, homeowners insurance doesn’t cowl damages attributable to flooding.

With one other above-average hurricane season predicted in 2022, lots of your insureds could possibly be coping with the fallout of rebuilding after a foul storm. If the value to rebuild their residence exceeds the usual policy restrict of $250,000—then they could wish to think about acquiring excess flood insurance.

Understanding Your Insureds’ Flood Danger

Given the rising incidence of maximum climate occasions in America, nearly everyone seems to be vulnerable to flooding. As their trusted insurance coverage agent, it’s essential to know the way a lot threat your shoppers’ properties may probably face so you possibly can proceed to assist maintain them protected and level them in the fitting course for protection.

Owners can study if their property is at low, medium, or excessive threat of flooding on the Federal Emergency Management Agency (FEMA) web site. The map is cut up up into zones which can be used to assist set up policy charges.

Whereas most lenders don’t require properties exterior of FEMA’s designated Particular Flood Hazard Areas (A and V zones), roughly 25% of all flood damages happen in low-risk areas that lie exterior the mapped flood zone.

The truth is, when Hurricane Harvey made landfall in Houston in 2017, it ravaged over 200,000 homes leaving greater than $125 billion in whole damages. Of those properties, 80% had been positioned exterior of the 100-year flood plain. Which means that the good majority of those property homeowners didn’t have any flood insurance coverage protection.

Different Flooding Dangers

As evidenced by the instance above, residing exterior of a high-risk flood zone doesn’t essentially imply they’re protected from flood harm. Flooding may result from unhealthy drainage methods, storms, melting snow, building, and broken water strains.

No matter how flood harm happens, flooding is among the costliest disasters to get better from. Whereas many owners have customary protection by way of the government-funded Nationwide Flood Insurance Program (NFIP) from FEMA, even these policyholders could also be stunned to study that an ordinary policy typically provides inadequate funds to restore, rebuild, or substitute contents of a house.

Most traditional flood insurance coverage insurance policies solely present residential property protection as much as $250,000 with a most content material protection of $100,000. Acquiring non-public flood insurance coverage can provide your insureds a better stage of protection for properties and belongings.

The Price of Rebuilding a House After a Pure Catastrophe Is Rising

In case your insured’s residence is broken or destroyed in a flood, the insurer will reimburse them for the price of rebuilding the home again to its unique specs earlier than the harm occurred.

The worth tag of water harm—not together with the price to interchange any contents of the house—is decided by the sq. footage of the construction, the quantity of water, and the price of labor to restore.

cost of flooding damage chart

*Chart above based mostly on the quantity of water in a 2,500-square-foot residence.

Sadly, given the rising value of nearly every thing wanted to construct a house, today, from lumber and supplies to labor, whole residence reconstruction prices have risen considerably (13.6%) within the final two years. The price of constructing supplies alone is up 28.7% since 2020.

Given these current developments, it’s a good suggestion to advise your shoppers to find out how a lot flood protection they want based mostly on whole present prices to rebuild the bodily construction of the house, surrounding buildings, and private contents of the house.

Protection for Your Shoppers

As an insurance coverage agent, your shoppers look to you to assist defend them and their properties in a worst-case state of affairs. As property values proceed to extend, extra protection that goes above and past the usual NFIP policy restrict will turn into extra related to your insureds than ever. Work with SWBC to assist your shoppers acquire the flood safety they want. Visit our website to study extra.


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