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Flood damage can happen where you least expect it If you haven’t noticed an uptick in flood-related damage in your area, it’s likely you will soon. What your clients need to know. By Tim Radcliff
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hen it comes to selling flood insurance, the world has changed for insurance professionals. According to the Federal Emergency Management Agency, flooding is already the most common and costly natural disaster in the U.S. Only one inch of floodwater in an average-sized home is capable of causing $25,000 in damage. Although flooding is already a serious threat, the problem is anticipated to get much worse. Extreme weather events such as hurricanes, tropical storms, heavy rains and flash floods are increasingly causing flood-related damage to residential and commercial property across the U.S. If you haven’t noticed an uptick in flood-related damage in your area, it is likely you soon will. 42
InsuranceNewsNet Magazine » July 2022
A recent study published in Nature Climate Change estimates that effects from climate change and population growth will contribute to a 26% rise in U.S. flood risk by 2050. Along with the increase in flood risk, researchers estimate that the total annual loss attributable to flooding across the U.S. could rise from a 2020 baseline of $32 billion to $41 billion over the next three decades. Although many assume flood damage is mainly of concern for properties located in coastal areas and flood plains, trends suggest flood damage can happen anywhere. According to the American Flood Coalition, 99% of U.S. counties have been damaged by a flooding event in the past 25 years. Additionally, the National Flood Insurance Program and FEMA issued a report in 2020 titled “Answers to Questions About the NFIP,” in which it was noted that more than 40% of all NFIP-paid flood losses from 2015 to 2019 occurred in areas outside mapped highrisk areas. This data underscores the fact that even properties that are seemingly at little risk of flooding can be susceptible to
major damage. Like many insurance professionals, I have witnessed this phenomenon firsthand. I recently spoke with a client who had purchased a house on top of a hill in rural Pennsylvania. Convinced that the elevated location of her home made it impervious to water damage, she didn’t even consider the prospect of investing in flood insurance. Sure enough, after a rainstorm built up enough hydrostatic pressure in the soil around the foundation to cause significant flooding in the basement, the client disclosed to me how the event led to a change in her perceptions. “If you would have told me when I purchased this house that I needed flood insurance, I would have found another agent, thinking you were trying to sell me coverage I didn’t need,” she told me.
“If my house on top of a hill can flood, any house can flood.”
