Even with prior losses, Joe Flood has solutions.Severe Repetitive Loss
Severe Repetitive Loss (SRL) policies within the National Flood Insurance Program (NFIP) present a particularly difficult situation for finding competitive rates. By their nature, SRL’s are those properties with a high number of flood losses. SRL rates through the NFIP can be very high, and private flood often denies coverage due to an unusually high loss history.
A client with a SRL building in a VE zone approached Joe Flood to try to find better pricing. The building recently became an SRL , and the insured was confused as to why his rate was increasing drastically at renewal. This SRL was particularly challenging because of a basement foundation and being an older, Pre-FIRM building. Older, Pre-FIRM SRL policies increase in premium at rates upwards of 25% a year. After reviewing the current policy and finding it to be grandfathered, Joe found the grandfathering information for the building to be wrong. It was grandfathered to an AE zone, but the building was always in the VE zone and never in an AE zone. Without the grandfathering, the $4,600 annual premium would increase to $26,000 annually.
The insured had an elevation certificate, and asked his agent at the time if an old elevation certificate would help. The agent said it would not help the rating because the insured had a basement that was below the Base Flood Elevation. But when Joe reviewed the elevation certificate, the basement was only 4 feet below the Base Flood Elevation. The elevation certificate was applied to the policy. An elevation certificate applied to most flood policies significantly reduces annual increases in premium.
When the elevation certificate was applied, the annual flood premium dropped from $26,000 to $12,000. The insured could now afford a slight reduction in the coverage to pay $7,000 per year in premium. Although the insured was unable to retain his $4,600 annual premium, the insured was thrilled to have correct coverage at $7,000 per year, all while staying with the NFIP and stopping the 25% annual increases. If the customer stayed with the $4,600 per year premium, the 25% annual increases would put the insured over $8,600 in annual premium within two years.