New Low Cost Commercial, Renters Flood Insurance Policies Available

April 15, 2004

The National Flood Insurance Program (NFIP) is offering new Preferred Risk Policy (PRP) products for both the commercial market and renters markets.

NFIP says these policies were created in response to consumer demand for lower-cost flood insurance options, and should help the insurance industry reach new customers, offer more options to existing customers, and protect agents against errors and omissions exposure. With changes taking effect May 1, 2004, insurance agents can start marketing new PRP products now.

The Preferred Risk Policy is an easy-to-write, low-cost flood insurance policy for properties in low-to-moderate risk zones, where one in four NFIP flood insurance claims occur. Devastating storms such as Tropical Storm Allison and Hurricane Floyd caused widespread flooding and property damage in these areas.

Two new Preferred Risk Policy products for commercial properties are available starting May 1, 2004. The first is a combination “building and contents” policy available for owners of commercial (non-residential) structures, including businesses, schools, and farms. Limits up to $500,000 in building and $500,000 in contents coverage are available. For business owners that do not own their buildings, “contents-only” coverage is available up to $500,000. Premiums for these policies are at least 30 percent less expensive than the standard flood insurance policy premium.

The third new PRP product is a low-cost “contents-only” policy available for renters of apartments or homes with limits up to $100,000. In addition to these new products, homeowners who currently have Preferred Risk Policies can now get higher limits of contents coverage at minimal additional cost.

“The NFIP is committed to providing consumers and business owners with affordable flood insurance resources that will protect their investments,” said Federal Insurance Administrator Anthony S. Lowe. “We encourage residents and businesses to know their flood risk and make informed decisions about options for flood insurance protection.”

To educate themselves and their clients, WYO companies and agents can visit the FEMA website at for the latest information on these new, low cost flood insurance products. Lowe said that with full knowledge of these new and revised PRP products, agents can offer their customers the coverage to meet their needs, expand their customer base, and reduce E&O exposure. The NFIP recommends that agents take the following steps:

– Review their current portfolio of flood insurance policy holders, both commercial and residential.
– Identify current commercial customers who may qualify for either “building and contents” or “contents-only” commercial PRP product.
– Offer the new “contents-only” PRP to residential clients who rent (annual premiums as low as $61). Continue to offer PRP to current homeowner clients.

Visit for additional information.

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