How to Sell Flood Insurance

Congress established the National Flood Insurance Program (NFIP) in 1968.

Congress created the National Flood Insurance Program in 1968 to help property owners recover losses due to flooding. According to Floodsmart.gov, the official site of the agency, the program offers flood insurance to homeowners, renters and business owners if their community adopts and enforces ordinances that reduce the risk of flooding. The ordinances should meet or exceed the requirements posed by the Federal Emergency Management Agency (FEMA). Selling flood insurance can increase sales potential for insurance agents.

Instructions

1. Find your target market. Low to moderate flood risk areas are specially good for selling flood insurance. Homeowners and renters in these areas can obtain flood insurance for as low as $119 per year, and the insurance will cover them for up to $250,000 in structural damages and $100,000 in content coverage as of August 2010. You can sell flood insurance in high flood risk areas for higher per-year rates, but the markets may already be saturated and have high competition. According to Insure.com, "almost 25 percent of all flood insurance claims come from areas with low to moderate flood risk."

2. Inform your audience of statistics regarding flood losses. According to National Flood Insurance Program, there's a 26 percent chance that your home will be flooded, and only a nine percent chance that it catches on fire over the 30-year mortgage period. These statistics can help you sell more flood insurance around flood risk areas.

3. Ask for referrals. Create incentives for your clients to refer neighbors and friends. Offer a flat cash fee for bringing in new clients. You can also create free monthly presentations open to the public about topics such as saving on insurance costs and being prepared for a flood. This techniques can help you break through new groups of clients.

4. Offer free consultations to determine flood risk. Set up a booth at a mall or commercial area with lots of foot traffic, and ask pedestrians if they would like to know if their house is located on a low to moderate flood risk zone. Don't be overly aggressive trying to sell your products. A free service can help you build long-term relationships which are always more valuable. Also, since most people will be expecting you to pitch them a product or service, not doing so can make them more curious and provide an opening for more genuine conversation. Also try to work with lenders in high flood risk areas. A lot of times they will make new clients obtain flood insurance to obtain a mortgage, and if they have a good relationship with you they are likely to send you new clients.

5. Customize the policy to make it more affordable for clients. Under the National Flood Insurance Program, you can customize a policy to only cover structural damage or contents separately.

6. Inform clients about the government's definition of a flood. According to the National Flood Insurance Program, a flood is "a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties, at least one of which is the policyholder's property, from:

   1. Overflow of inland or tidal waters; or

   2. Unusual and rapid accumulation or runoff of surface waters from any source; or

   3. Mudflow; or

   4. Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above."

   If a homeowner's basement get water as a result of heavy rains, for example, this would not qualify for claims.

Tips & Warnings

• Flood policies go into effect 30 days after the client makes a purchase. If your clients are buying a flood policy because the weather forecasts floods in one week, the policy will not cover them. Communicate this fact to avoid lawsuits in the future.

References

• Insure.com: Who Needs Flood Insurance
• Floodsmart.gov: Why Sell Flood Insurance?
• About NFIP

Resources

• FEMA Map Service Center