Get to Know Your Clients

Clients have unique flood insurance needs – from retirees looking to protect the life they’ve built, to business owners looking to safeguard their livelihood.

By getting to know your clients and understanding their needs, you can build your business while building trust.

NFIP's Pricing Approach, Risk Rating 2.0, State Profiles provide state-specific rate analysis for all 50 states and the District of Columbia, as well as mitigation actions a policyholder can take to lower their risk of flooding and, possibly, the cost of their insurance. Also available for each state and the District is a breakdown of the data used to create the state profile bar graphs and a corresponding narrative that provides qualitative context. These documents can be found at fema.gov/flood-insurance/risk-rating/profiles. 

Spotlight on: New homeowners

Jeff Baugh purchased flood insurance to protect his new home and young family. For Jeff and other families like his, flood insurance is a small price to pay for peace of mind.

Making insurance decisions to protect a new investment is an important step in buying a home. That’s why it’s important for agents to work closely with new homebuyers and their real estate agents to make sure clients secure the necessary coverage – including flood insurance.

Added bonus: Working with new homebuyers is an opportunity to create a long-standing client relationship.

NFIP's Pricing Approach

Flood insurance rates under NFIP's pricing approach, Risk Rating 2.0, are easier to understand and better reflect a property’s unique flood risk. With NFIP's pricing approach, FEMA addresses rating disparities by incorporating more flood risk variables like flood frequency, multiple flood types — river overflow, storm surge, coastal erosion, and heavy rainfall — and distance to a water source, as well as property characteristics such as elevation and the cost to rebuild.

Knowing the true risk of one’s property will help to inform appropriate mitigation measures that property owners can take to ultimately reduce their risk. NFIP's pricing approach identifies risk by leveraging FEMA mapping data and FEMA-produced models and tools in combination with industry standard commercial catastrophe models to develop rating variables. These rating variables provide the data necessary to accurately assess the risk at a structure level and therefore accurately price insurance.

Property owners in high-risk flood areas

Properties in the high-risk flood area (indicated as V or A zones on flood maps) have at least a one-in-four chance of flooding during a 30-year mortgage.

Clients in high-risk flood areas face real risk, so it is important to underscore the value of flood insurance compared to the cost of even a minor flood event.

Due to their risk, clients in high-risk zones will likely pay higher premiums and may be concerned about the affordability. Help high-risk clients understand their premium costs, cost-savings options, and ways to reduce costs by mitigating their risk.

Flood insurance is required for homeowners and business owners who live in the high-risk flood area and have a federally backed mortgage. Check in with clients who are about to pay off their mortgage to ensure they continue to purchase flood insurance even after it is no longer required.

• Talking points for high-flood-risk clients
  • Securing flood insurance is a crucial step to protecting the life you’ve built.
  • If you are in a high-risk area and carry a federally backed mortgage, flood insurance is mandatory.
  • Homes in the high-risk flood area, like yours, have at least a one-in-four chance of flooding during a 30-year mortgage.
  • Just one inch of flood water can cause more than $25,000 in damage to a home, making flood insurance a small price to pay for peace of mind.
  • If you have questions about cost, there are some measures you can take – such as mitigation – that can lower your annual premiums.

• Talking points for moderate- to low-risk clients
  • Securing flood insurance is a crucial step to protecting the life you’ve built.
  • Flooding can happen anywhere at any time, and not always in high-risk flood areas.
  • More than half of the homes and businesses damaged by the 2016 floods in Louisiana were in moderate and low-risk areas. From 2015 to 2019, 40% of claims came from outside the high-risk area.
  • No matter what your risk is, you can purchase flood insurance. The only requirements are that your community participates in the National Flood Insurance Program (NFIP) and your property qualifies for coverage.

Renters and contents coverage

Flood insurance isn’t just for homeowners. Renters comprise one fifth to one half of residents in many communities; however, renters flood insurance represents only 2% of NFIP policies.

Agents can work with renters to protect their valuables and personal property by purchasing flood insurance. Most traditional renters insurance does not cover flood damage. Only flood insurance can help renters protect the lives they’ve built.

Because most renters do not need to secure coverage for their building, their overall coverage is often more affordable.

• Talking points for renters
  • Securing flood insurance is a crucial step to protecting the life you’ve built.
  • Flood insurance is available for renters. Protect your personal property and valuables with contents coverage from the NFIP.
  • Most traditional renters insurance does not cover flood damage. However, NFIP flood insurance covers your personal belongings up to $100,000.

Business owners and commercial coverage

Every year, thousands of businesses throughout the United States are affected by flood events.

For business owners, the cost of a flood event can be devastating. Just a few inches of water can damage walls and floors, wreck expensive equipment, ruin furniture, destroy supplies, and cost tens of thousands of dollars to repair. These repair costs are in addition to the loss of income that comes from a disruption to business operations.

Because of this, far too many businesses end up having to close their doors or take on additional loans after a flood event.

• Talking points for business owners
  • Flood insurance provides peace of mind for business owners. From 2011 through 2015 the average commercial flood claim was nearly $90,000.
  • Floods can be emotionally and financially devastating events. At least 25% of small businesses never reopen following a disaster
  • Recover faster and more fully with flood insurance. The NFIP offers commercial policyholders building coverage for up to $500,000 and contents coverage up to $500,000.
  • Without this coverage, many business owners are forced to take out loans or pay recovery costs out of pocket – adding financial stress to your business.
  • Qualified business owners in moderate- to low-risk areas can purchase basic commercial contents and building coverage for less than two dollars a day, making flood insurance a good value for business owners.