So you have found out you are in a special flood hazard area. So now its time to find a flood insurance policy.
So how do you pick the right flood insurance agent?
I mean all flood insurance is the same, right??
Today we are going to look at two approaches flood insurance agencies take when setting up flood policies. At the end we hope to help you pick the choice that is right for you.
First if a flood insurance company tells you all flood insurance is the same this is a great sign that they are not the right flood insurance agent for you.
All flood insurance is not the same. Even flood insurance through the National Flood Insurance Program might now be the same.
There are many things that could give someone a different rate. There are three things below that we will take a quick look at.
- Elevation certificates
- Policy assumption
Elevation certificates could show a big difference in rate. If this elevation certificate shows you are above the base flood elevation it could give you a great rate while without it the rate maybe much higher.
Policy assumption is another way that National Flood Insurance Program rates could be different. This is when one policy is signed over from one property owner to the next.
We have see more than $3000 rate here. You see when you set up a new policy with National Flood Insurance Program its based on current rates and guidelines.
However when a policy is assumed it is going off the guidelines of when the policy was set up. If this policy has been in place even more than a year it could be much cheaper rates. This is why we recommend looking at a policy assumption when possible.
So what about grandfathering?
Trust me grandfathering can make a big difference in rates when available. I know I had to grandfather my own property in Monroe Georgia almost 10 years ago.
I was told flood insurance would be more than $3000 a year. However because of my educational background in flood mitigation and understanding grandfathering my rate $350 a year.
So as you can see there can be a lot of differences in rate with the National Flood Insurance Program.
However you also don't want to forget about private flood insurance. If someone tells you it doesn't exist or they don't offer it then they might not be the right flood insurance agent for you. Private flood insurance can offer some unique coverages and pricing.
Now lets look at transactional and consultative
Transactional Flood Insurance Agencies
Transactional flood insurance agents or agencies many times are trying to make the process as quick and painless for you. There can be some benefits to using them like the cheapest rate some times and getting things done quickly.
These type of agencies are usually based on volume so they are doing a lot of these policies everyday.
However many times where this can be a danger is picking the right coverages and long term impacts.
On these transactional agencies many times they will have you pick the coverages or will put what the mortgage company requires. This can be dangerous if you are like most consumers you probably aren't sure what coverages are needed for flood insurance.
To give you an example of these I spoke to a client yesterday that wanted 8,000 in contents coverage for his lake cabin. We started talking about furniture and personal belongings in the cabin. It had at least 50,000 worth of stuff. So we recommended about 100,000 in contents coverage for them.
You generally may not get this with a transactional flood insurance agency. Now let's look at the long term impacts. Many times these transactional flood insurance agencies do not look at long term impacts on the customer.
We are talking about long term rates and the impact of flood insurance claims. Wouldn't it be nice to know how stable flood insurance rates are in an area over a 5 year period. Wouldn't also be nice to know how flood insurance claims might impact you before filing them.
These are some of things you don't get with a transactional flood insurance agency. Now let's look at consultative flood insurance agencies.
Consultative Flood Insurance Agencies
Have you ever had a problem you needed help walking through and wanted to know what solutions are available. You might even need help getting to these solutions. This is exactly what consultative flood insurance agencies do.
They walk property owners through the following things
- Flood insurance coverages
- Flood insurance options
- Flood zones
- Flood mitigation
- Long term rates
- Impacts of flood claims
So let's look at flood insurance coverages first. These type of agencies or agents walk customers through understanding building coverage, contents, coverage, loss of use when available, and deductibles.
Consultative flood insurance agencies generally do a good job of using examples of when each coverage would be needed.
For example the difference in coverage for appliances and furniture. One might be part of the building and the other one may not.
Then there is flood insurance options. This is where a consultative flood insurance agency could save you a lot of money and headaches long term.
A good consultative flood insurance agency shows the customer the difference in the national flood insurance program and private flood insurance companies.
They show them the benefits and negatives. For example what if you saved a $100 by switching to a private flood insurance policy this year. However it cost you a $1000 more next year. Wouldn't be nice if someone could show you that.
Now when it comes to flood insurance rates a consultative flood insurance agency may not have the cheapest rate but it can be the best policy. No one cares how much money they saved when a flood insurance claim occurs and they have nothing.
This could help you as a property owner make a better decision on flood insurance.
So what about the long term impact of flood insurance claims.
Flood insurance claims work differently than property claims. When a traditional home insurance claim occurs it might stay on the insured and property record for 3-5 years. If the insured goes to buy another home this claim might hurt them. This is not the case with flood insurance claims as they follow the property.
However flood insurance claims can stay on the property forever. For example many private flood insurance companies will not insure a property that has ever had a claim. Others may not want any claims in the last five years.
So what if you filed a $1500 claim on a policy with a $1000 deductible? Well if it s a private flood insurance policy then the policy could be non renewed.
In fact we recently saw this happen with a property owner 2 weeks before renewal. They ended up having to go back to the National Flood Insurance Program with a rate that was $5000 higher.
These are the type of things that consultative flood insurance agencies can help you avoid.
So you might ask what is The Flood Insurance Guru?
We pride our selves on being a consultative flood insurance agency.
So if you have further flood insurance questions or how to pick the right agent click here.
You can also check out our daily flood education videos on our YouTube channel.
You can also tune into our podcast by clicking here.
Remember we have an educational background in flood mitigation. This means we are here to help you understand your flood insurance, flood risk, and mitigating your property long term.