Should You Obtain A Flood Policy?

2017 is predicted to have an uptick in hurricane activity. Despite the number of claims related to Hurricane Matthew in 2016, the insurance demand for hurricane-exposed property has not improved.  Fitch Ratings, a leading provider of credit market data and risk services, predicts pricing conditions to remain challenging in the primary property market, particularly commercial property, as well as at the midyear 2017 reinsurance renewals.  The concern is for insurance carriers to stay competitive and affordable with their pricing.

Many homeowners may not be aware that their policies do not cover flooding.  Property coverage typically only indemnifies the policyholder for losses that occur as a result of wind damage, so the debate over wind versus flood damage to property after a hurricane is an issue that remains highly contested in settling claims.  With past flood losses driving the debt to an outstanding $23 billion, the National Flood Insurance Program (NFIP) recently placed its first risk transfer programs, aiming to lower its net exposure to major catastrophe events. With the NFIP authorization set to expire on September 30, 2017, part of the discussion of reauthorization centers on how private insurers can complement the NFIP going forward.

Major flood claims exceed the premiums paid for insurance so, flood damage remains a key risk even if wind damage is minimal.  “The ability of the NFIP to transfer risk to traditional and alternative reinsurance markets, will be a key factor in securing the viability of the program in the face of significant catastrophic flood events,” added Christopher Grimes, Director of Fitch Ratings.

If your home or business is located in a flood zone, FEMA requires you to obtain a flood insurance policy.  However, it has been proven that mother nature is very unpredictable and does not discriminate when it comes to where catastrophic weather will occur.  If you would like to take the precaution of protecting your property from flood damage, please do not hesitate to contact us for a free quote with no obligation.