Friday, August 30, 2024

Penn State Study Examines Perceptions Of Flood Insurance - Clients Often Underestimate Their Flood Risk, Lack Knowledge About Flood Insurance

A recent
Penn State Institute of State and Regional Affairs report examined the perceptions of flood insurance among real estate professionals, lenders, and insurers, and how these factors influence client decisions. 

Its conclusion: Clients often underestimate their flood risk and are unaware of the complexities and costs associated with flood insurance, particularly renters who face significant information gaps.

Real estate professionals, lenders, and insurers have unique insights into homeowners’ flood insurance knowledge and perceptions. 

These professionals play a crucial role in guiding clients through the homebuying process and securing flood insurance coverage, and their knowledge and perceptions can influence clients’ decisions about flood insurance.

This study found that clients often underestimate their flood risk and have a lack of knowledge about flood insurance. 

This is partly due to the complexity and cost associated with flood insurance, which remains a major concern for most clients. 

The results of a statewide survey suggest that many individuals living in flood-prone areas are underprepared for the potential risks, with few having flood insurance and many unsure of their residence’s flood insurance status. 

Renters were found to be particularly vulnerable, being less likely to have flood insurance and in need of additional support and education. 

Disparities in access to flood insurance information and resources were also noted, with nearly twice as many respondents being told they did not need or could not get flood insurance compared to those who were told they needed it. 

The findings highlight the need for improved education and resources regarding flood insurance, especially for those at higher risk of flooding and with limited options for protection.

This study also revealed a knowledge gap among professionals, who may lack the necessary training and experience to educate clients about flood risk and insurance coverage. 

While insurance professionals are generally viewed as experts in flood insurance, realtors and lenders may have personal biases or outdated information that could influence their recommendations. 

Realtors have the opportunity to overcome the stigma of flood-prone properties by providing valuable information to clients about flood zones, insurance requirements, and the potential impact of flooding on properties. 

The report recommends developing industry-specific training modules, collaborating with prelicensing education providers, and partnering with regulatory bodies to integrate flood risk and insurance coverage training.

Click Here for a copy of the report.

Visit the Insurance Department’s Flood Insurance webpage for more information on your insurance options.


(Courtesy: Southwestern PA Commission Water Resource Center.)

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[Posted: August 30, 2024]  PA Environment Digest

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