Flood insurance can be one of the most misunderstood insurance policies. Whether you are writing an insurance policy for a first-time homebuyer or renewing an existing policy, it behooves you to ensure your client or prospective client understands the importance of purchasing a flood insurance policy.
 
Even a successful insurance agent gets pushback when discussing additional insurance coverage. Come to the table prepared to address some common objections.
 

5 of the Most Common Flood Insurance Sales Objections (and How to Overcome Them)

Insurance agents require skillful negotiating to close a deal. Learn how to respond to the most common objections to give your clients peace of mind that flood insurance is a sound investment.

1: My homeowners' policy covers flood damage

As an agent, you know that most homeowners’ policies don’t include flood damage. After checking your client’s homeowners’ policy to confirm, keep the answer simple: “No, it doesn’t.” Make it clear to your client that homeowner’s policies do not cover flood events. Explain that any water damage sustained to their house due to flooding is specifically excluded from coverage under their homeowners' policy.

Let your clients know that recovering from a flood without insurance can be daunting. Not only can their house be ruined during a flood, but so can their financial well-being.

2: I’m not worried about it flooding

You don't want to sound like a doomsday forecaster, but it is essential to convey to your client the importance of being prepared for the worst-case scenario. Climate change is top of mind for many Americans. News headlines frequently feature climate change, the nightly weather report discusses it, schools include it in curricula, and families discuss it over the dinner table. Now, you should discuss it with your clients.

Highlight a few flood facts, such as:

• Climate change has increased snowmelt and the frequency and intensity of extreme weather events, such as hurricanes, storms, and heavy rainfall.

• Climate change is causing shifts in flood-risk areas. Homes and businesses  previously considered in low-risk areas may face an increased likelihood of flooding. More than 40 million U.S. residents are at risk from flooding along rivers and streams.

• The number of flood-prone areas around the country is expected to grow by nearly half in just this century.

• Nearly 57% of Hurricane Harvey NFIP claims came from properties located in moderate- to low-risk flood areas.

Create a cheat sheet of the above facts and include location-appropriate issues that lead to flooding, such as an increase in construction, aging town infrastructures (dams, levees), and pollution.

3: I have NFIP insurance, so I’m already covered

To an extent. Your client may not be aware of the $250,000 building coverage limit of the NFIP. What if their house is worth more? In many states, the average price for a single family home is more than the NFIP building coverage limit. Let them know, if eligible, they can supplement their NFIP coverage with excess flood insurance or, suggest they explore the private flood insurance space to find a policy with higher limits.

Explain the benefits of private insurance over NFIP, specifically highlighting response time for the claims process, coverage options (many private policies offer optional coverage for pool clean up, and/or additional living expenses), and competitive rates. A picture, or chart in this case, is worth a thousand words, so use a coverage comparison chart to illustrate the benefits of private flood insurance.

4: It’s too expensive

First, ask your client if they know how expensive it is to recover from flood damage. Chances are they have no idea. Give anecdotes, show pictures, and share a few eye-opening statistics from FEMA:

• Just one inch of water in your house can cost more than $25,000 in repairs.

• The average NFIP claim  between 2016 and 2022 was more than $66,000.

• The average FEMA disaster assistance grant award was only $3,000 for the period between 2016 and 2022.

When your client realizes just how much they stand to lose, choosing to purchase flood insurance is an easy decision. So, when your client says, “I can’t afford flood insurance,” respond with this question, “Can you afford not to?”

Lay out the total costs, policy terms, and monthly payments, and work to identify a solution based on the premium and terms that fit a client’s needs.

5: Let me think about it

The odds of closing a sale decrease if your client wants to think about it and get back to you. However, pressure tactics do not benefit anyone. Before leaving or ending a phone call, create a sense of urgency by reiterating the increase in flood events and their potential financial burden in the event of a flood.

Suggest an in-person follow-up in two or three days where you can answer any remaining questions and give some customer testimonials. Make it clear that you understand their perspective, provide information in a clear and concise manner, and keep the lines of communication open.

Additional Tips to Explain the Importance of Flood Insurance

• Many people are hesitant to spend their money on flood insurance because it has never flooded where they live. Remind them they pay car insurance premiums but may never submit a claim.

• Emphasize the recovery assistance that flood insurance can provide. When the financial burden is alleviated, they can focus on getting their life back in order rather than worrying about the costs.

Selling flood insurance is about more than just the policy. Building rapport and trust with your clients during the insurance sales process and ensuring they feel heard and supported is important and can open the door to future insurance leads.

Aon Edge Helps Provide the Information You Need

Our team is dedicated to delivering flood insurance that works for everyone. We make it easy for brokers to start writing Aon Edge private flood insurance.

We streamline the flood insurance process with instant online quoting and simplified underwriting. See our resource center for a library of information to help you grow your private flood insurance book of business.
Getting appointed with Aon Edge is easy! Contact us today.

This article is provided for general informational purposes only and is not intended to provide individualized advice. The article is not a replacement for any NFIP publications. All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy.