Excess Flood Insurance: Why your clients should consider it?
Home values skyrocketed 21% on average in this last year, due to multiple economic factors including supply chain disruption, labor shortages, and increased competition for fewer available homes. According to U.S. Census data, 79% of new construction homes sold in 2020 for more than $250,000. October 2021 data from the National Association of Realtors found 72% of sales on existing homes was also above $250,000.
How do your clients protect the full value of a home that sits above the NFIP’s $250,000 maximum? This is where an excess flood insurance policy can help.
What is excess flood insurance?
Excess flood insurance offers coverage beyond the NFIP or EZ Flood policy limits. An excess policy essentially “sits on top” of another flood insurance policy to help your client cover the additional dollar value of property damaged in a qualifying flood event.
The National Flood Insurance Program (NFIP) offers limits up to $250,000 for a residential building and $100,000 for its contents, and up to $500,000 for a commercial building and $500,000 for its contents. EZ Flood offers:
- Maximum building limit: $1,250,000
- Maximum personal property limit: $875,000
- Option for $5,000 in additional living expenses; $500 in food spoilage coverage
- Option for $1,000 swimming pool clean-up protection
There are scenarios and clients for which an excess flood policy is helpful to complement the above coverages.
Perhaps your client wants or needs to maintain an NFIP policy over a private flood insurance option like EZ Flood. If their home value is above the $250,000 NFIP maximum coverage for residential buildings, you can write an Aon Edge Excess Flood policy that offers additional protection.
Your client may be an EZ Flood policyholder already, but the replacement cost for their home is above the $1.25MM maximum for EZ Flood building coverage. Securing an Aon Edge Excess Flood policy offers protection to their home value.
Download our Excess Flood Highlight Sheet
What Aon Edge Excess Flood offers
Residential and commercial properties are eligible for coverage under an Aon Edge Excess Flood policy. Benefits include:
- Coverage up to $5MM (building and contents combined) for structures with replacement cost value up to $15MM
- Available in all states except Alaska, Kentucky, and Washington, DC
- Coverage for all residential risks except condominiums
- Terrorism available for Non-Residential and Other Residential risks
However, please note the following are ineligible risks:
- Buildings in COBRA zones
- Buildings in Emergency Program
- Non-residential contents
- Contents coverage without building coverage
- Residential Condominium Building Association Policies (RCBAP) and single condo units
- Risks with total replacement cost/actual cash value greater than $15MM
Commercial coverage through Aon Edge Excess Flood
Through Aon Edge, you have access to quote Excess Flood for eligible commercial locations, through an online quote platform, with coverage limits up to $5MM (building and contents combined) for structures with replacement cost value up to $15MM, subject to underwriting.
If you need limits over what Aon Edge can offer, then we can have our in-house underwriter review an application for Insurmark Excess Flood
, which offers:
- In-House Authority with up to $15 million in coverage
- Replacement Cost or Actual Cash Value
- Building, Contents, and Business Interruption coverage available
- Contents coverage on a standalone basis available
Talking to your clients about Aon Edge Excess Flood
Aon Edge published an eBook in 2021 that is an agent’s guide for how to help sell private flood insurance, including EZ Flood and Excess Flood policies. One of our tips is to start with helping your clients to understand the risk. They may not be worried about flooding in their home, but according to FEMA, floods are the most common and costly natural disaster in the U.S. If you have clients that don’t live in a high risk zone where lenders require flood insurance, you may want to advise them that from 2015 to 2019, 40% of NFIP claims were for properties located in low to moderate risk areas.
Once your clients understand the protection offered by flood insurance, the next step is to talk to them about how much flood insurance they should purchase. Coverage adequacy is a key topic for insurance agents, especially given the current economic environment of rising home values and construction costs. This is where Aon Edge Excess Flood may fulfill a need to help your clients to cover the full value of their homes.
This article is provided for general informational purposes only and is not intended to provide individualized advice. 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.