Ignorance is not bliss when it comes to flood insurance, especially for those who don’t realize until after a disaster like Superstorm Sandy that their home or business doesn’t have any coverage under standard policies.
Insurers and their agents have tried for years to get the word out about this glaring coverage gap. But too many policyholders either don’t pay attention or don’t recall being told they needed to buy a separate policy from the National Flood Insurance Program (NFIP) to cover that specific risk. Others may get the message but choose to pass on the option—either because they don’t believe they can afford the additional coverage, or figure the worst-case scenario won’t happen to them.
There certainly would be sticker shock if federal-flood coverage is automatically included in a premium quote. And while insurers and agents would simply be the messenger here, consumers might take their anger out at the industry for having flood insurance foisted upon them.
But frankly, what has the industry got to lose? Insurers and agents are already being blamed (and even sued) after a disaster for allegedly not making policyholders aware of the lack of flood coverage in standard policies, or for failing to make a compelling enough case to add it on.