Colsa Insurance Agency, Inc. Blog
For 2017, private flood insurance statements had to be reported. This was the first time that such information was required to be reported. The Insurance Information Institute released a list of the market's biggest insurance companies offering the coverage based on previously gathered data and they said that over 80 percent of the market share was held by these leading companies. The top company alone held nearly 55 percent. Total premiums written by all companies totaled over $375 million.
What is Private Flood Insurance?
This type of coverage is available for both residential and commercial properties. The policies cover excess flood and flood peril, and they do not include damages from sewer backups or crop flooding. In the past, only the government offered flood insurance. However, private insurers are becoming more comfortable offering this coverage today because of the following reasons:
Why Private Insurance is a Good Solution
After several catastrophic hurricanes over the past decade, the National Flood Insurance Program offered by the Federal Emergency Management Agency took a major financial hit. It is currently billions of dollars in debt. This has also helped open the market for private insurance companies to offer flood protection. Lawmakers like the solution since it will help get the NFIP out of debt faster.
In early 2017, the NFIP transferred financial risks totaling $1 billion to private insurers. This was done through reinsurance, which FEMA gained approval for, thanks to the Homeowner Flood Insurance Affordability Act of 2014 and the Biggert-Waters Flood Insurance Reform Act of 2012. More options and competitive pricing are two benefits that an improved private flood insurance market would create.
A Peek At Potential Savings
KatRisk and Milliman partnered to collect and analyze data from three states that have been affected by catastrophic hurricanes and face higher risks of future damages. The organizations looked at data from Louisiana, Texas and Florida. These three states represent over 55 percent of the NFIP's active policies in the USA. The researchers compared NFIP premiums to several private insurance premium models.
Research showed that more than 75 percent of Florida homeowners would see lower premiums with private insurers. More than 90 percent of Texas homeowners would save money, and nearly 70 percent of Louisiana homeowners would see a premium drop. About 70 percent of the Texas homes included in the model would qualify for a premium that is one-fifth of the NFIP's equivalent policy. The ratio dropped to about 45 percent in Florida and a little over 40 percent in Louisiana. However, researchers also found that about five percent of the modeled homes in Texas would see premiums that were higher than the NFIP's, and the ratio increased to about 15 percent in Florida and over 20 percent in Louisiana.
As researchers continue to track state-specific data in the coming years, more property owners will be making the switch to save money. To learn more about private flood insurance and if it is a good solution for individual needs, contact us.
Almost everyone has a risk of their home being flooded, regardless of where they live. And now as flooding has become an annual threat to many communities across the country, even areas that were not considered flood-prone are also at risk.
There was record rain and snow in many parts of the country in the early part of the year, and many areas can therefore expect flooding.
According to the Federal Emergency Management Agency, more than 20% of all flood insurance claims come from areas outside of high-risk flood zones - and that number is rising with each passing year.
That still means the vast majority come from high-risk areas. How can a property owner find out what their flood risk is?
Gauging your flood risk
FEMA considers a property to be at high risk of flood if there is at least a one-in-four chance of flooding during the life of a 30-year mortgage.
Geographic areas with this risk are known as special flood hazard areas (SFHAs). Federal regulations require federally regulated or insured mortgage lenders to confirm that mortgaged properties in these areas carry flood insurance.
The traditional way to determine a property's flood risk is to locate it on a flood insurance rate map (FIRM). FEMA publishes these maps based on geographic survey data. They are the official depictions of flood hazards in a locality.
FIRMs are freely available for review at the Flood Map Service Center on FEMA's web site. As a property owner, you can view your flood risk by entering your address in the search field.
Flood maps assign each area in a community to labeled flood zones. Areas with low-to-moderate risks of flooding are assigned to zones with labels beginning with the letters B, C, X or a shaded X. SFHAs are designated with the letters A or V. These areas are shaded on the maps for easy identification.
Property owners can also search for their flood risks at FEMA's flood insurance consumer web site, www.floodsmart.gov. By entering your address in the fields on the home page, you can quickly learn whether you face a low-to-moderate or high risk.
The site offers other valuable tools, such as an estimator that can calculate how much financial damage a given amount of water (two inches, four inches, etc.) would cause in homes of various sizes.
For example, six inches of water in a 2,000 square foot home would cause $39,150 in damage.
FEMA also offers a suite of flood risk products that go beyond the information provided in a FIRM. They include:
These products are helpful for community planners, but individual property owners can also use them to get a clear idea of their flood risks.
Elevation certificates may also be on file with local governments for certain properties. These documents show the elevation of the lowest floor of a building (including the basement) compared to the base flood elevation for the area.
An elevation certificate demonstrates community compliance with flood-plain management laws and is used to set appropriate flood insurance premiums.
A flood can be every bit as catastrophic as a fire. It is worthwhile for property owners to learn their flood risk and take steps to reduce it. Additionally, with the increasing risk of flooding in non-flood-plain areas, if you live near a flood plain, you may want to secure flood insurance.
One of the biggest mistakes you can make if you incur damage to your business premises is to wait too long before filing the claim with your insurer.
The owners of a hotel in Dallas learned this the hard way when a U.S. Circuit Court of Appeals held that the business had waited too long to file a claim with its insurer after suffering hail damage.
The court ruled that because the hotel had waited more than 19 months to file the claim, it was impossible for the insurer to ascertain exactly when the damage had occurred.
The hotel's property policy required that the insured make "prompt notice" of any claims.
But the insurer rejected the claim when it received it for a hailstorm that had happened more than a year and a half earlier, on the grounds that it could not determine what had caused the damage or when the damage occurred. This was crucial since the policy had expired 17 months earlier - two months after the storm had allegedly damaged the hotel.
Believe it or not, filing late is a common problem and it is one of many mistakes business owners make when filing claims. The following are surefire ways to risk having your claim denied or disputed by your insurance company:
Not contacting your insurer immediately
While most insurance policies state that you must notify the company promptly of a loss, what counts as "prompt" may be a little vague. However, you can wreck your claim by reporting a loss so late that it "prejudices" the insurance company.
For the most part, you should take steps to notify your insurer as soon as possible after you become aware of a loss.
Failing to document the damage
Take pictures and itemize everything that was damaged. Often, you will have to make repairs immediately to prevent additional damage, or move machinery to a new location. If so, be sure to photograph the original scene to document how it was before you started your clean-up effort. Also take photos of any repairs you make.
Disposing of damaged goods
If your business clean-up includes removal of items such as water-damaged merchandise, flooring or insulation, keep it all, even if it has to pile up in the parking lot. The damaged materials are all evidence of the impact of the disaster on your business.
Not appealing an insurer's low estimate
After the claims adjuster inspects the damage, the insurance company will give you a damage estimate. If you think it's too low, you can appeal. We can help if you feel the estimate is too low.
But some businesses will hire an outside adjuster to make a second estimate, and then the claim will go to mediation for a final resolution.
Not reading your policy
You should understand exactly what your policy covers. For the most part, commercial property policies will not cover flooding or earthquake damage. That kind of coverage will often require a separate policy or rider.
Not being prepared
If your business suffers damage, you'll be better off if you know what to do in advance. Some advance steps you can take are:
A final word…
Filing a claim is usually not a difficult process, but you should be prepared in advance, like making sure you keep good records of all your assets, including receipts, payment schedules and more.
Finally, if you are unsure whether you should file a claim on any of your commercial policies, you can always give us a call to discuss the event and we can assist you.