What High Home Prices Mean for Your Clients’ Flood Insurance Needs


This publish is a part of a collection sponsored by SWBC.

In the final two years, many owners have seen the worth of their properties skyrocket. Between 2019 and 2020, the median value of a house solely rose by $20,400, however between 2020 and 2021, it rose by $40,200. From 2021-2022, they rose over $46,700, bringing the median residence value to $357,300.

The common price ticket for newly listed properties, which had plateaued round $389,400 in 2019, shot as much as greater than $443,200 in August of 2021. Average new residence costs have risen by 13.5% since March 2021 and 26.5% in comparison with March 2020.

How do rising residence values impression your insureds? For one factor, if the worth of their residence has risen considerably within the final couple of years, their commonplace flood insurance coverage coverage could now not supply ample safety for their wants.

Floods are the most typical sort of pure catastrophe that strikes owners within the nation. According to FEMA, only one inch of floodwater in a house may cause over $25,000 in property harm! Despite this, owners insurance coverage doesn’t cowl damages attributable to flooding.

With one other above-average hurricane season predicted in 2022, lots of your insureds could possibly be coping with the fallout of rebuilding after a foul storm. If the worth to rebuild their residence exceeds the usual coverage restrict of $250,000—then they could wish to think about acquiring extra flood insurance coverage.

Understanding Your Insureds’ Flood Risk

Given the growing incidence of utmost climate occasions in America, nearly everyone seems to be liable to flooding. As their trusted insurance coverage agent, it’s essential to understand how a lot danger your purchasers’ properties may probably face so you’ll be able to proceed to assist preserve them secure and level them in the best course for protection.

Homeowners can study if their property is at low, medium, or excessive danger of flooding on the Federal Emergency Management Agency (FEMA) web site. The map is break up up into zones which might be used to assist set up coverage charges.

While most lenders don’t require properties outdoors of FEMA’s designated Special Flood Hazard Areas (A and V zones), roughly 25% of all flood damages happen in low-risk areas that lie outdoors the mapped flood zone.

In reality, when Hurricane Harvey made landfall in Houston in 2017, it ravaged over 200,000 properties leaving greater than $125 billion in whole damages. Of these properties, 80% had been positioned outdoors of the 100-year flood plain. This implies that the good majority of those property house owners didn’t have any flood insurance coverage protection.

Other Flooding Risks

As evidenced by the instance above, residing outdoors of a high-risk flood zone doesn’t essentially imply they’re secure from flood harm. Flooding may result from dangerous drainage techniques, storms, melting snow, building, and broken water strains.

Regardless of how flood harm happens, flooding is likely one of the costliest disasters to recuperate from. While many owners have commonplace protection by the government-funded National Flood Insurance Program (NFIP) from FEMA, even these policyholders could also be shocked to study that an ordinary coverage typically provides inadequate funds to restore, rebuild, or substitute contents of a house.

Most commonplace flood insurance coverage insurance policies solely present residential property protection as much as $250,000 with a most content material protection of $100,000. Obtaining personal flood insurance coverage can supply your insureds a better degree of protection for properties and belongings.

The Cost of Rebuilding a Home After a Natural Disaster Is Rising

If your insured’s residence is broken or destroyed in a flood, the insurer will reimburse them for the price of rebuilding the home again to its unique specs earlier than the harm occurred.

The price ticket of water harm—not together with the associated fee to interchange any contents of the house—is decided by the sq. footage of the construction, the quantity of water, and the price of labor to restore.

Average prices in Budapest

cost of flooding damage chart

*Chart above based mostly on the quantity of water in a 2,500-square-foot residence.

Unfortunately, given the rising value of nearly all the pieces wanted to construct a house, today, from lumber and supplies to labor, whole residence reconstruction prices have risen considerably (13.6%) within the final two years. The value of constructing supplies alone is up 28.7% since 2020.

Given these current traits, it’s a good suggestion to advise your purchasers to find out how a lot flood protection they want based mostly on whole present prices to rebuild the bodily construction of the house, surrounding constructions, and private contents of the house.

Coverage for Your Clients

As an insurance coverage agent, your purchasers look to you to assist shield them and their properties in a worst-case situation. As property values proceed to extend, extra protection that goes above and past the usual NFIP coverage restrict will turn out to be extra related to your insureds than ever. Work with SWBC to assist your purchasers achieve the flood safety they want. Visit our web site to study extra.


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