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Is It Time for Opt-Out Flood Insurance?

With so many homes and businesses left exposed after Superstorm Sandy because their owners didnt buy flood insurance, perhaps its time to automatically include federal flood coverage in standard policies for certain properties, while giving buyers the right (and responsibility) to opt-out.

By Sam J. Friedman | Updated on January 30, 2013

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.

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