Who Can You Trust After the Flood Claim?

When there's flooding and houses impacted, you can expect that there will be a lot of flood claims with it. Although generally, we recommend refraining from filing that flood claim if the damages are not that big or less than $10,000 in order to make sure that you avoid getting into the repetitive loss (RL) property list in Federal Emergency Management Agency (FEMA), we understand that there are times where filing that claim is simply inevitable.

Once this happens, we usually get a lot of questions along the lines of "this flood claim isn't good for my property. Who can I trust on flood insurance?", so today we answer that question, determining the best flood insurance provider, and the other impacts of flood claims on flood insurance options in the future.

After the Flood

First, let's talk about what you should expect after you file that flood claim. Now, it's important to note that other than getting the coverage promised in that flood policy, the flood claim can also tell you the possible state of your property when it comes to both FEMA and the private flood insurance market.

After the flood claim, you can expect to receive the coverage in your policy, and in the case of FEMA, this may mean that you're going to have to scour for the repair company as a second option. However, it's highly discouraged that you decide on choosing the repair company if you're aiming to get cheaper costs. Most of the time these cheaper repair companies aren't approved by FEMA and won't fit the standards and guidelines on repairing a flooded property which can mean that they won't provide coverage for the costs of repairs. 

Often times, FEMA and private insurance companies have the power to decide how to respond to the flood claim. They can choose whether they'd replace and repair the damages through their preferred repair companies or they may provide the cash needed for the repairs and the insured will be the one to find the repair company that fits the expectations of the insurance company. There will be some cases that they won't decide and will ask for your plans on the flood claim.

If this is you're second, third, or maybe the fourth claim within the last ten years this will be sure to affect how your property appeals to private flood and how it would be listed in FEMA's data. There's something that's called "repetitive loss (RL) property" which only happens if you file more than one claim in the last ten years.

Now, when it comes to flood claims sometimes it's avoidable, but sometimes it isn't. This is why you should also strategize with your insurance agent on how to approach flood claims and when it's really necessary to file one. As much as possible, it's best to keep your flood claim to a minimum or once only for every ten years in order to avoid being placed in the repetitive loss (RL) list. 

Repetitive Loss

Repetitive loss isn't based on a flood zone, so this doesn't mean that because you're in a Flood Zone AE, you're most likely to be in the RL property list. The repetitive loss property is determined through the number of flood claims made across the life of the property. So, it may be that you're in a low-risk flood zone but is still under the repetitive loss list due to the multiple claims you did in the last ten years.

When you're placed on the repetitive loss property list, you may expect FEMA to raise your flood insurance rates drastically as a response to the large number of funds that these properties are drawing in from FEMA. The rising of premiums and rates really depends if you're willing to accept the mitigation efforts that FEMA will ask you. If you decide to reject this offer, then your flood insurance will increase but not more than that actuarial rate for your property.

However, this doesn't mean that FEMA will let go of you due to the number of claims you did in the past 10 years. This is why we always say that FEMA and the National Flood Insurance Program (NFIP) takes all the risks.

This is very different from the private market. Private carriers generally non-renew a policy after they receive a claim and we've seen this happen recently with a client. They filed a flood claim with this private carrier and four days after, the private carrier sent them a non-renewal letter. This is why we always preface private flood with their ability to pick and choose the risks they're willing to take.

Some private carriers may still be available out there, but generally, RL properties are something that they shy away from due to the extreme risks it has when it comes to flooding. If you know that you're on the repetitive loss property list, you might want to reconsider trusting private flood since they're more likely to non-renew your policy or overall refuse to provide insurance for your property.

Flood Insurance Options

When it comes to filing a flood claim, you always need to remember that you can still have the two options when buying your flood insurance: FEMA and the private market.

The NFIP

Like we've mentioned, FEMA doesn't really get to pick and choose their clients so you can still go through the National Flood Insurance Program (NFIP) granted that you're in a participating community. This guarantees that despite your recent flood claim, you can go through FEMA again and expect that they won't process a non-renewal due to the claim. The NFIP will provide maximum coverage of $250,000 for property or building damage and $100,000 maximum for contents coverage.

You may also be registered for the Increased Cost of Compliance (ICC) program which can provide additional coverage of up to $30,000 for flood mitigation efforts which can really help prevent your property from getting those increased rates if it were to be listed in the repetitive loss property.

The Private Flood

You may also go through the private flood insurance market still although this might be something that you shouldn't put high hopes into. Most properties with recent flood claims generally get rejected from the private flood however the good thing is that since there are dozens of carriers or private insurance companies in this market, you may find another carrier that will write a policy for you.

The private flood insurance market provides more than the maximum limit of the NFIP and generally with lower premiums. This means that you can get more than $500,000 in property coverage and more than $250,000 in content coverage.

If you're written a policy from private flood, you can also get coverage for additional living expenses, replacement costs, and loss of use which can really help you recover from a flood loss.

At the end of the day, your best friend in this type of situation is your insurance agent, so make sure to consult them on what to do before, during, and after a flood. Always feel free to ask how to approach flood claims and the possible impacts of it moving forward. Through your agent, you may also get an idea of which carriers generally won't approve of properties with flood claims or in the repetitive loss list.

If you have any questions on flood claims, flood insurance options, and how to best manage your flood insurance, feel free to reach out to us using the links below. You can also visit our YouTube channel for our daily flood education videos or call us to know more.

Remember, we have an educational background in flood mitigation and we want to help you get the best deal out of your flood insurance in order to best protect you, your family, and your property from flood risks.