Insurance agents who do not offer a flood policy alongside property coverage face errors and omissions exposure, according to Trevor Burgess, CEO of managing general agent Neptune Flood Insurance.
Burgess raised the issue as heavy rain, flooding and strong winds tied to an atmospheric river and winter weather system continued to affect Washington state.
Because standard homeowners policies exclude most flood damage, Burgess said agents should offer flood insurance “every single time. If you're not, and people didn't know, the E&O risk is a real challenge.”
Burgess said the industry should focus on increasing take-up for the flood peril and said agents need to make sure homeowners understand they generally must buy a separate policy for flood coverage. He framed that as both a consumer education issue and a way to reduce disputes tied to exclusions.
That message extends beyond coastal floodplains and the highest-risk zones on FEMA’s maps, according to separate Neptune commentary on national take-up. The company has said about 77% of at-risk single-family homes located outside FEMA-designated Special Flood Hazard Areas still do not carry flood insurance, leaving many households exposed even when a mortgage does not require the coverage.
Burgess said Neptune would like to grow its policy count in Washington as flood risk expands, while balancing exposure across other states. “Love to have 100 times as many policyholders in Washington State. We can balance that off in California, Ohio, New Hampshire . . . Reducing volatility makes it an investible asset,” he said.
Washington Insurance Commissioner Patty Kuderer filed an emergency order that grants grace periods for nonpayment of premiums and extends the notice period for nonrenewals to 120 days from 45 days.
Neptune accounts for nearly 10% of flood policies in Washington, Burgess said. He said the company expects only a couple dozen claims from the event.
“About 1% of households in Washington have flood insurance,” Burgess said. “This will be a rude awakening for homeowners who thought they had coverage.”
Similar gaps have been reported after other inland flooding, which insurers and brokers have cited as a driver of post-event coverage discussions. After flash floods in Central Texas in July, the Insurance Information Institute reported that only 2.5% of impacted homeowners had NFIP policies in force, a figure that aligns with Burgess’ broader point about limited take-up outside traditionally mapped flood zones.
Burgess said agents should not rely on Federal Emergency Management Agency flood maps when deciding whether to recommend coverage.
“The government acknowledges that the maps are wrong,” he said, citing flooding in Washington and Texas as recent reminders to discuss exclusions with customers.
In “pure insurance dollars, hurricanes are the biggest drivers” of flood losses, Burgess said, adding that claims can occur well beyond coastal landfall zones.
Neptune said outdated FEMA maps “fuel underinsurance, distort mortgage markets and property values, and allow risky development to slip through,” and cited more than 211,000 housing units built from 2019 through 2023 in areas it described as high risk but not identified by FEMA.
