Renewing Your Client’s Flood Insurance

Flood insurance policies do not renew automatically, so it is important to work with clients every year to ensure their coverage does not lapse. Flood insurance renewals can provide an important annual touchpoint with clients, and an opportunity to remind them of the value of flood insurance.

It is typically costlier for agents to identify, market, and sell flood insurance to a new policyholder than it is to keep an existing client, making it important to focus first on keeping your customers covered. Additionally, customers may be at higher risk of lapsing in the first two years of being a policyholder, so pay particular attention to new clients in your portfolio.

Clients will be notified of their upcoming policy renewal window by their insurance carrier. FEMA may also mail a renewal reminder letter during this time.

Every year after renewing, your clients will receive a copy of the Flood Insurance Claims Handbook, Summary of Coverage, and a loss history for their property – making renewal a crucial moment to help clients understand their specific flood insurance needs.

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Gambler's fallacy: Many homeowners who commit the “gambler's fallacy” mistakenly believe that past events affect the probability of something happening in the future. For example, “My community was impacted by flooding this year, so we’re probably safe for next year.”

Talking points: “Why should I renew my policy?”

It’s important to let clients know that just because they haven’t experienced a flood doesn’t mean they never will. Just like the Tiptons, who purchased flood insurance for more than 20 years before experiencing a catastrophic flood event. The bottom line is: continuous coverage gives your clients uninterrupted flood protection.

During policy renewals, discuss the following talking points with clients:

  • An afternoon storm, backed-up storm drains, or new construction in your area could bring inches of water into your home, causing thousands of dollars in damage to walls, floors, and furniture. And most homeowners insurance doesn’t cover flood damage.

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    If you allow your flood insurance policy to lapse once for more than 90 days, or during two or more annual renewal cycles for any number of days, you may be required to provide an Elevation Certificate and you may no longer be eligible for discounted flood insurance rates.

  • If you live in a high-risk area and have a loan from a federally regulated or insured lender, you are required to renew your flood insurance. When you purchase a home, you accept liability for any damage from fire, wind, hail, theft, or flooding that may occur while you live there. If you choose not to purchase a policy, your lender will force-place a policy at a much higher cost.

Renewal: Your client's annual flood insurance “checkup"

When renewing, take the time to review the following with your clients:

  • Coverage: Make sure your clients understand their coverage, and review if the current coverage is still adequate. For example, is their home insured for the full replacement cost value, not just the amount remaining on their mortgage? Do your clients have both contents and building coverage, particularly if they have valuable belongings? This is also a good time to explain exclusions and limitations specific to NFIP flood insurance, as well as other coverages – including excess coverage – that may be available for their needs.
  • Deductibles: Deductibles apply separately to building and contents coverage with different amounts from which to choose. As with other insurance plans, a higher deductible will lower your client’s premium but will also reduce their potential claim payment, meaning they’ll need to cover the difference out of pocket. Check with clients to confirm their deductible amounts and to ensure they understand their risks and opportunities.
  • Opportunities to reduce cost by reducing risk: Are there ways for your client to pay less? Discuss potential cost-saving options like elevating utilities, updating flood openings, or retrofitting basements.

Spotlight on: NFIP’s renewal marketing

To ensure that current flood insurance customers maintain their flood insurance protection, the NFIP conducts an annual renewal marketing campaign.

Our campaigns have incorporated some of the following marketing best practices:

  • Customers are busy with long “to-do” lists. Messaging that talks about the value and peace of mind that comes with purchasing flood insurance, and messaging that puts flood insurance in the broader safety and preparedness context, helps flood insurance move to the top of customers’ “to-do’s.”

    For example:

    • "You can’t control the weather, but you can prepare for it.”
    • “Flood insurance is a small price to pay for peace of mind.”
    • “Just one inch of water can cause $25,000 in flood damage.”
  • Renewal customers have already made the smart investment to purchase flood insurance. Use messaging that reinforces their good decision and encourages them to continue purchasing for the year to come.

    For example:

    • “You know the value of being prepared.”
    • “You can’t control the weather, but you know the value of preparing for it.”
  • Reminding customers to renew their policy increases the chances that they do so. That means a combination of direct mail, email, and even phone reminders could help to increase your customer retention.

  • Customers receive hundreds of advertising messages a day, so it’s important for flood insurance messages to stand out. Develop materials and touchpoints with customers’ attention in mind. For example, “tear-open” letters or mail with insurance card inserts might stand out better in the mail and help to hold a customer’s attention.