Insurance producers need to step up and ensure that homes at risk from flood are fully covered, according to a Colorado industry body chief.
Mountain towns in Colorado were shocked by torrential rains and widespread flooding yesterday, but flood insurance policyholders may be in for a nastier shock. According to Carole Walker, executive director of the Rocky Mountain Insurance Information Association, basic federal flood policies do not pay for damaged personal possessions.
However, a simple upgrade to a more comprehensive policy could have saved victims’ furniture and other domestic items.
In Boulder, where Colorado home and business owners were hit hardest, 3,504 policyholders have flood insurance through the National Flood Insurance Program (NFIP). However, most of those with flooded basements or homes won’t have coverage for items beyond circuit breakers, water heaters and furnaces.
“NFIP is a federal program, which means it’s much more limited than private policies,” said Walker. “For contents, the only coverage for flood would be things that are attached to life safety—your washer and dryer or your freezer full of food. It won’t cover your home theater.”
For that level of coverage, Walker says insurance producers and homeowners have to look towards larger carriers in the state. In Colorado, the best option is Lloyd’s of London, which offers flood insurance policies with high limits for both the structure and its contents.
NFIP also offers another form of flood insurance that may cover some home and business contents. However, most Coloradoans don’t carry this more expensive form of flood insurance because they don’t know about it. Instead, they opt for the simple coverage required for homes with federal mortgages.
That’s where insurance producers need to step up and become better-versed in flood insurance language. Walker said that flood insurance in Colorado comes with relatively low premiums, even when purchased from NFIP, making full coverage a real option for many businesses and homeowners.
Insurance producers should do their part in pushing these low-cost, high-coverage policies to avoid the headache the state is currently experiencing, she said.
“Up to 25% of flood claims come from low- to moderate-risk areas like ours. It’s an important policy and agents and brokers need to know what flood insurance offers,” said Walker. “The big message here is, yes, we live in Colorado but we do get flash floods. It’s our most common natural disaster, and we really urge agents to offer flood insurance to everyone.”
