Episode 133: How Do Water Claims Impact Flood Insurance Rates?

We hear from people all the time that think they don't qualify for flood insurance because of water claims.

In this episode of the podcast we want to discuss the misinformation that is out there when it comes to water claims.

Water claims can be confusing. Just this past week we had a property owner who was being overcharged by $3000 because the water claims were not being listed on their flood insurance quote properly.

We see this confusion everyday between property owners, insurance agents, realtors, and even mortgage companies.

So let's separate the two worlds that confuse everyone that is home insurance and flood insurance. When we do this it simplifies everything for everyone. If you file the water claim as a home insurance claim then its not going to impact the flood insurance availability, unless you have some kind of special endorsement on your home insurance policy for flood coverage.

Just like if you file a flood insurance claim for a water claim then it should not impact your home insurance unless its all part of the same policy.

So now that we have that settled let's look at when water claims actually impact flood insurance availability.

Flood insurance claims can have a big impact on the availability of flood insurance just ask the flood victims of Houston Texas, Florence Alabama, Nebraska City Nebraska, Knoxville Tennessee, and Tulsa Oklahoma.

Many times when you file a flood insurance claim you could be looking at a non renewal from a private flood insurance company or a big rate increase if you have the policy through the National Flood Insurance Program.

Let's look at the availability of flood insurance when one claim is filed. When this occurs many private companies will not do a new policy unless it has been more than 5 years. The ones that will do it are going to charge significantly higher flood insurance rates.

Now let's look at when two water claims are filed under flood insurance.

Now this could put alot of people in a real pickle.

Because if you have a preferred flood insurance policy through the National Flood Insurance Program it could disqualify you. This doesn't mean your policy would be cancelled it simply means that you now have a standard rate which will be much higher.

As you can imagine including your water backup claim or pipe burst claim as flood claims could have a big impact. Thankfully the National Flood Insurance Program does have some protective measures against this when issuing a policy. However that doesn't stop the property from being quoted properly.

Same goes for the private side unless you are running a quote through the National Flood Insurance Program. You may not know if a property has had numerous flood losses. The potential property owner may not even know about these losses unless you live in Texas.

Texas passed a new disclosure law in 2019 that now requires property owners to disclose the flood zone they are in, if there have been any flood claims, and their proximity to potential flood risks.

As you can see misinformation of water claims could have a big impact on your wallet. If you have further questions about how these things might be impacting your wallet then make sure to visit our website. You can also check out our daily flood education videos on our YouTube channel.