In answer to recent flooding, Nationwide has proposed a new home insurance package which includes cover for flood and wind damages all in the same offer. Recent flooding hazards worldwide as well as last summer’s grave flooding in the south of England and 2005’s Hurricane Katrina’s devastating damages has caused virtually all insurance companies to downsize their home insurance deals, not covering flood and wind damages. This has meant homeowners have had to purchase flood insurance and wind insurance separately in order to protect their home from some of the most likely risks at the moment. Nationwide have responded to this gap in the market by proposing to offer a new deal of home insurance, including flood and wind insurance all in the same package.

The idea is that such a package would avoid disputes over “wind/water” issues for policyholders across the country. Authorized and regulated by the federal government, the proposed Enhanced Homeowners Insurance Policy would combine the wind insurance coverage of a traditional homeowner policy with flood insurance coverage similar to that now offered by the National Flood Insurance Program into one home insurance policy. Under the proposed coverage, the private insurance market would bear the primary responsibility of paying claims, with the federal government acting as a reinsurer and regulator.

“Americans need not suffer through a catastrophic event lacking the comprehensive insurance coverage they need,” said Jerry Jurgensen, Nationwide CEO. “If Hurricane Katrina taught us anything, it is that the market needs a home insurance product that covers flooding as well as wind damage in one policy.” If authorized by Congress, those who purchase the new home insurance product would be assured that no matter how their home may be damaged, coverage for wind and water would be available in one policy.

Following Hurricane Katrina in 2005, thousands of lawsuits were filed against insurance companies challenging long-held homeowner policy provisions that exclude flood damage as a covered loss. Even though the courts have upheld the flood exclusion provisions as legal, Nationwide engaged in conversations with a variety of stakeholders to find a market-driven solution to the “flood/wind” problem and to propose a product that would meet customer needs.

“This solution will need the support of the federal government to be implemented,” Jurgensen said. “For the benefit of all, Congress should begin the process to make this new coverage option available as quickly as possible.”

The enhanced homeowner insurance policy would fold flood coverage into a new, augmented homeowners policy that insurers can voluntarily sell and homeowners can voluntarily purchase, however neither would be mandatory. The plan is for it to be regulated by the U.S. Treasury Department, which would also reinsure the flood portion to make sure that coverage was financially feasible. In theory it would be an option that would increase both customer choice and customer confidence.

It is hoped the new policy would provide an additional option for customers to consider as they make key decisions to protect their home. Existing coverage options would also be available. Consumers would still be able to purchase a policy that does not cover flood damage, or a stand-alone policy from the federal flood program. However, for homeowners who desire comprehensive coverage in one policy, this policy would provide it for them.

Nationwide continues to support an open dialogue with policymakers to develop market-driven solutions that will give customers, carriers and regulators greater peace of mind when the next storm strikes.