Why We Need Flood Insurance

The last few weeks have felt like a tropical rainforest.  We have had more rain than I can remember having in just a few weeks time and our area is starting to see the problems with this.  


For example, my father-in-law has a rental property I had to go to last week that was almost underwater.  The rain was coming down so fast that it had nowhere to go.  In fact, the furnace vents are under the floor of the house and had completely filled with water.  Several towns not to far from us have even made national news in the last few weeks.

The pictures are devastating.

That is exactly why our country has a National Flood Insurance Program - to protect consumers from the potential damages of floods.

The thing that I find interesting is how a borrower responds when they are told they are in a high-risk flood zone and need to carry flood insurance.  How do they typically react?

They always argue and say they don’t want insurance and that they are not in a flood zone.  Always.

I just can’t understand this.  As someone who has studied flood insurance and the National Flood Insurance Program, the statistics are clear: if you are in a high-risk flood zone, you are eventually going to experience damage.

In fact, if you live in a high-risk flood zone, your home is twice as likely to be damaged by a flood than it is by a fire.  Your risk of a fire is around 9%, while your risk of a flood is over 25%.  Yet, I don’t know of anyone who has argued about their homeowners insurance because we all know someone who has lost everything in a fire.  I know three different families.

Yet those in a high-risk flood zone - who are twice as likely to have damage - always try to get out of carrying flood insurance.

Another interesting statistic is that 20% of all claims to the National Flood Insurance Program come from properties that were outside of a high-risk flood zone.  This means that they were in a low-risk zone, but still experienced a flood.

The truth is, as much as customers hate having to carry flood insurance, statistics show that they need it.  The next time you or your team has to tell a customer they need flood insurance, stay strong because you know there is a storm coming.


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