2022-What High Home Prices Mean for Your Clients’ Flood Insurance Needs


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

Within the final two years, many owners have seen the worth of their houses skyrocket. Between 2019 and 2020, the median worth 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 worth to $357,300.

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

How do rising residence values influence your insureds? For one factor, if the worth of their residence has risen considerably within the final couple of years, their customary flood insurance coverage coverage might now not supply ample safety for his or her wants.

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

With one other above-average hurricane season predicted in 2022, lots of your insureds may very well 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 contemplate acquiring excess flood insurance.

Understanding Your Insureds’ Flood Threat

Given the rising incidence of utmost climate occasions in America, just about everyone seems to be vulnerable to flooding. As their trusted insurance coverage agent, it’s essential to know the way a lot threat your shoppers’ houses may probably face so you’ll be able to proceed to assist hold them secure and level them in the correct course for protection.

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

Whereas most lenders don’t require houses outdoors of FEMA’s designated Particular 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 truth, when Hurricane Harvey made landfall in Houston in 2017, it ravaged over 200,000 homes leaving greater than $125 billion in whole damages. Of those houses, 80% have been positioned outdoors of the 100-year flood plain. Which means the nice majority of those property house owners didn’t have any flood insurance coverage protection.

Different Flooding Dangers

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 unhealthy drainage programs, storms, melting snow, development, and broken water traces.

No matter how flood harm happens, flooding is without doubt one of the costliest disasters to get better from. Whereas many owners have customary protection by way of the government-funded Nationwide Flood Insurance coverage Program (NFIP) from FEMA, even these policyholders could also be shocked to study that an ordinary coverage usually presents inadequate funds to restore, rebuild, or substitute contents of a house.

Most traditional flood insurance coverage insurance policies solely present residential property protection as much as $250,000 with a most content material protection of $100,000. Acquiring personal flood insurance coverage can supply your insureds the next degree of protection for houses and belongings.

The Value of Rebuilding a Residence After a Pure Catastrophe Is Rising

In case 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 worth tag of water harm—not together with the associated fee to switch any contents of the house—is set by the sq. footage of the construction, the quantity of water, and the price of labor to restore.

cost of flooding damage chart

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

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

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

Protection for Your Shoppers

As an insurance coverage agent, your shoppers look to you to assist shield them and their houses in a worst-case state of affairs. As property values proceed to extend, extra protection that goes above and past the usual NFIP coverage restrict will grow to be extra related to your insureds than ever. Work with SWBC to assist your shoppers acquire the flood safety they want. Visit our website to study extra.


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