As an insurance agent or broker, helping clients choose the right flood insurance is crucial—especially when they face the aftermath of a flood.
Understanding the distinctions between the National Flood Insurance Program and private flood insurance is essential for guiding clients effectively.
National Flood Insurance Program
The NFIP was created by Congress in 1968 and is administered by the Federal Emergency Management Agency. It provides flood insurance to property owners, renters and businesses in participating communities that adhere to FEMA’s floodplain management regulations. The NFIP offers policyholders coverage of up to $250,000 for residential buildings and $100,000 for contents. For commercial properties, it provides up to $500,000 for both buildings and contents. The NFIP aims to offer essential flood insurance coverage, ensuring that even those in high-risk areas have access to necessary protection. However, its standardized coverage limits and requirements can sometimes be less flexible compared to private insurance options.
The standardized nature of NFIP policies means that while they provide a baseline level of protection, they might not offer the customizable options that some policyholders need. This can be particularly relevant for those with unique property situations or higher-value assets. Agents should make sure clients are aware of what an NFIP policy does and does not cover, as this can help set proper expectations and avoid potential misunderstandings during the claims process.
Private insurers
Private flood insurers operate independently of FEMA, offering customizable coverage tailored to meet individual needs with more flexibility. Market-driven premiums can lead to more competitive pricing by accurately reflecting the unique flood risk of each property. These carriers often provide additional benefits such as coverage for temporary living expenses if a home is uninhabitable or more extensive coverage for personal property, which an NFIP policy does not cover.
Private insurers are not bound by the same regulations as the NFIP, which allows them to offer a broader range of coverage options. This flexibility can be beneficial for clients who require specific coverage that the NFIP does not provide. The ability to tailor policies to fit individual needs can result in better protection and potentially lower premiums for clients, depending on their specific risk factors and insurance requirements.
Filing a flood claim: steps to guide clients
Understanding the claims process for both NFIP and private flood insurance is vital to assisting your clients effectively. Here’s a step-by-step guide:
No. 1: File the notice of loss. Promptly submit a written notice of flood-related damage to the insurance carrier, including the policy number. Encourage clients to act quickly to ensure their claims are processed in a timely manner.
No. 2: Separate the insured property. Advise clients—in writing—to separate damaged from undamaged property to protect the latter. Move undamaged items to a safe, dry area. Emphasize the importance of photographing all damaged items before discarding them—unless they pose a health or safety risk, or local law requires disposal. This documentation is crucial for supporting the claim and ensuring that clients receive appropriate compensation for their losses.
No. 3: List and photograph personal property. If they have contents coverage, assist clients in creating a detailed list of all damaged personal property. Include descriptions, quantities, brand names, purchase prices, sizes, and any other relevant details along with photographs. Having a thorough, documented, personal inventory will help expedite the claims process and ensure that nothing is overlooked.
No. 4: List and photograph structural damage. Guide clients to document and photograph all structural damage, such as cracks, sagging floors, or hard-to-open doors and windows. This step is vital for substantiating the extent of the damage and supporting the claim.
No. 5: Contact the adjuster. Within a day or two after receiving the notice of loss, an adjuster will contact the client to start the claims process. Help clients schedule a time for the adjuster to inspect the property. Preparing for this visit by having all documentation and answers to questions ready can facilitate a smoother inspection process.
No. 6: Inspection and scoping. During the inspection, the adjuster will take measurements, photos and notes about the damage. Be available to assist in preparing an inventory of damaged items if required. Explain to clients that the adjuster’s role is to assess the extent of the damage and that their cooperation is key to a comprehensive evaluation.
No. 7: Request advance or partial payment. Inform clients that they can request an advance or partial payment to begin recovery before the insurer settles the full claim. Note that if there is a mortgage, the mortgage company must sign all building payment checks. This advance can help clients start repairs and replacements more quickly, alleviating some of the immediate financial burdens.
No. 8: Request additional payment. If additional damage is discovered during the claims process, clients can request an additional payment within the 60-day limit or within any granted extensions. Ensure clients notify the adjuster and provide necessary documentation, including a written Proof of Loss and a contractor’s detailed estimate of costs. Remind clients to keep all receipts and documentation of repair costs to support their claims.
No. 9: File an appeal. Clients can file an appeal directly with FEMA if their claim is partially or fully denied. Emphasize that there is no cost to file an appeal and no need for third-party representation. Appeals must be filed within 60 days of the insurer’s denial letter. Providing guidance on how to prepare a comprehensive appeal, including necessary documentation, can be instrumental in achieving a successful outcome.
Conclusion
By consulting with you, their independent insurance agent or broker, and following these steps, clients can navigate the flood insurance claims process smoothly and confidently. Whether they have an NFIP or private flood insurance policy, your guidance will ensure they are well-informed and prepared.
Regular communication and support throughout the process will help clients feel more secure and assured that they are making the best decisions for their recovery and protection.
This article originally appeared in the September 2024 issue of PIA Magazine.
Theophilus Alexander
Theophilus W. Alexander joined PIA Northeast as a government & industry affairs specialist for the Government & Industry Affairs Department in 2023. Prior to joining PIA, Theo had served in both houses of the New York State Legislature. Previously, he worked as a legislative analyst for Hon. New York State Sen. Samra G. Brouk, D-55, and he served at the New York State Assembly, as a policy analyst with New York Assembly Program & Counsel. Theo received his Bachelor of Arts degree in Politics from Ithaca College in Ithaca, N.Y.
