The Historic 2017 Hurricane Season and Why Flood Insurance Matters

Hurricanes Harvey and Irma wreaked havoc across the Caribbean and United States this summer. Thousands were left devastated by the damage, and unfortunately, with hurricane season running through November, we may not have seen the last of these storms.

So many are dealing with the aftermath of these disasters, and many victims are also finding out they will be forced to recover without the assistance of insurance. Why is that? Only a small percentage of homes were covered by flood insurance from the National Flood Insurance Program (NFIP) — a federally-funded program that is, essentially, the only flood protection available to homeowners.

It is estimated nearly 70 percent of homes damaged by Hurricane Harvey did not have flood insurance. The homeowners policies will help them recover from wind and roof damage, but flood damage is not included.

So, it begs the question: Why isn’t a flood insurance policy a no-brainer for all?

For starters, it is estimated that 43 percent of homeowners believe their homeowners insurance covers them for flood loss. In reality, standard homeowners policies do not cover flood damage — at all.

Additional misconceptions about flood insurance include:

• Some homeowners believe if they live on higher ground, or nowhere near a coast or river, they’re immune from the devastation a flood can cause. However, that damage can happen anywhere.
• Others believe that if a big storm hits then the federal disaster aid will cover the damage. That’s rarely the case. A typical disaster grant is only around $5,000, and anything more is a low-interest loan that the homeowner must pay back.
• There is also a general lack of information. Additionally, calculating flood risks can be difficult, and many homeowners also believe they’re in a low-risk zone.

What is Flood Insurance?

Homeowners insurance does not cover damage to a home caused by flooding. You must have a separate policy to cover flood-related losses. Most flood insurance policies are written by the NFIP.

You are eligible for flood insurance if:

• You live or own a business in a high-risk area
• You live or own a business in a moderate-to-low-risk area — and possibly at a lower cost
• Your home or business has been flooded before
• Your mortgage company doesn’t require it

All properties are at some risk for flooding. The NFIP is dedicated to making property owners and renters aware of the need for flood insurance.

Homeowners can insure a home for up to $250,000 and its contents for up to $100,000. Renters can cover their belongings for up to $100,000. Non-residential property owners can insure a building and its contents for up to $500,000 each. On average, a flood insurance policy premium is roughly $700 per year.

Flood Damage vs. Water Damage

The first step after water damages your home is determining whether you have a water damage claim or a flood claim. How can you tell the difference? Let’s turn to the Federal Emergency Management Agency’s definition of a flood?

A flood is defined as a general and temporary condition of partial or complete inundation of two or more acres and two or more properties of normally dry land. Flood damage can only be caused by the following water sources:

• Overflow of inland or tidal waters
• Mudflow
• Unusual and rapid accumulation or runoff of surface waters from any source
• Collapse of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in flood as defined above

The main difference between a water damage claim and a flood claim is that the water comes from a natural source, and two or more properties are involved. If you and your neighbors are all having water issues due to heavy rains, then you are likely dealing with a flood insurance claim.

What Is and Isn’t Covered?

Most flood insurance policies include building property and personal property coverage. Some insurable assets under these policies include, but are not limited to:

• The insured building and its foundation
• Electrical and plumbing systems
• Central air conditioning equipment, furnaces, and water heaters
• Refrigerators, stoves, and other built-in appliances
• Personal belongings such as clothing, furniture, and electronic equipment

However, not everything is covered by building property or personal property coverage, such as:

• Damage caused by moisture, mildew, or mold that could have been avoided by the property owner
• Property and belongings outside the building
• Currency, valuable papers, and metals

It doesn’t take much for damages to occur. Just a few inches of water can cost you thousands of dollars. Flood insurance can help you avoid that situation.

For additional information regarding our flood insurance policies, please contact us at your convenience.