Credit: Yurii Kibalnik/Adobe Stock
While 84% of homeowners say flooding is becoming more prevalent, 62% say they won't purchase flood insurance because of low risk, according to a new study from Chubb.
The study, which surveyed more than 1,500 high-net-worth homeowners, commercial businesses, brokers and agents, found many homeowners and business owners misunderstand both their flood risk and what kind of coverage they need.
Fully 80% of survey respondents said their homes have flood insurance coverage, but only 5% of Chubb's clients have flood insurance. And 70% of homeowners said they use government flood maps to determine their risk. Flood maps can be out of date, and don't account for as many variables as commercial modeling tools.
Business owners are also underestimating their risk. Among commercial businesses, 36% said they haven't purchased flood insurance because of the cost. But 50% of commercial businesses that experienced flooding had repair costs of more than $100,000.
Insurance professionals said their main challenge when discussing flood insurance with clients is that many don't believe it's necessary (42%). High cost of premiums (39%), the perception that flood risk is an isolated events (36%) and lack of understanding about coverage (35%) were other top barriers.
The study found that clear messaging from trusted sources can help educate homeowners and businesses about flood insurance. According to the survey, 52% of homeowners said advice from trusted experts influenced their decision to pursue flood prevention and mitigation measures.
"Clear and direct communication is the most impactful way to counter the common misconception among policyholders and potential clients that natural catastrophe-related flood damage is covered under a standard property policy," said Louis Hobson, senior vice president for North America flood insurance at Chubb, in a statement. "Agents and brokers should be using every channel available – email campaigns, social media platforms, policyholder portals and one-on-one consultations – to drive home this message."
Photo credit: Yurii Kibalnik/Adobe Stock
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