Why ‘Low-Risk’ Flood Zone Homes Could Sink Your Clients—and Your E&O
In September 2023, Hurricane Idalia dumped record rainfall across North Carolina, causing extensive flood damage in areas outside of FEMA-defined flood zones. These regions had no mortgage-mandated flood insurance requirements, leaving thousands of homeowners exposed, resulting in hundreds of millions in uninsured damages.
Here are seven facts about flood insurance that agents should consider:
1) Why “low-risk” homes could sink your clients—and your E&O. Approximately 25% of all flood insurance claims come from properties outside high-risk zones, according to the National Flood Insurance Program (NFIP), yet less than 16% of those homeowners carry flood coverage. Relying on FEMA zone status to drive flood discussions is a costly oversight for clients—and a professional risk for agents.
2) Flooding brings catastrophic costs for the uninsured. A single basement flood can cost $40,000–$50,000 in cleanup and repair. In North Carolina alone, post‑Idalia, reports suggested there were between $200–$400 million in uninsured flood losses.
Flood coverage doesn’t just protect homeowners—it protects agents from E&O fallout when disaster strikes.
3) Flood insurance doesn’t have to break the bank. Thanks to preferred risk policies, many homeowners in moderate-to-low-risk areas pay under $700 annually for flood insurance. That’s less than $2 per day for coverage that can preserve their most valuable asset. Add in newer private-market products, and clients have more flexible and affordable options than ever.
4) Agents are risk advisors, not order takers. An agent can increase their value by running a flood risk profile, regardless of FEMA zone; modeling the potential cost of a two-foot water intrusion; and showing cost-effective options through NFIP or private carriers.
5) Failing to offer flood insurance is an errors & omissions risk. Not discussing flood can lead to E&O exposure for agents. The solution is simple: always offer a quote or get a signed declination. It protects your client, your agency and your reputation.
6) Timing is everything: Risk Rating 2.0 is here. With FEMA’s Risk Rating 2.0 reshaping the way premiums are calculated, rates are shifting—often upward. Agents who proactively educate their clients can lock in lower NFIP rates before future increases, migrate clients to market-driven rates with fewer manual underwriting restrictions, and reinforce flood coverage as a value‑add, not a luxury.
7) Even in high-risk zones, flood insurance is underutilized. Fewer than 5% of homes in FEMA-designated high-risk zones carried flood insurance in the recent devastating flash floods in Kerr County, Texas. Of nearly 3,000 such homes, under 150 were insured. Over 13,000 properties overall—inside and outside high-risk zones—were flooded, with estimated damages around $18 billion, according to the Houston Chronicle.
Making Flood Your Next Line of Defense
Flood insurance is no longer a niche product. It’s a necessary part of a responsible home protection strategy—regardless of where the home sits on the map. For agents, it represents an opportunity to build trust, prevent loss and generate new premium without reinventing your operations.
Here’s a simple action plan to get your clients thinking about flood insurance:
- Run a flood quote for every new home client.
- Review moderate-risk homes already in your book.
- Send a two-line email with the subject line: “Have you reviewed your flood coverage this year?”
- Bundle flood with homeowners for simplified service and stronger retention.
Today’s agent must think beyond compliance—we’re risk managers, relationship builders and sometimes lifesavers. Because when the water rises, it’s too late to sell the policy.
