Word: This visitor publish is by David A. Thompson, CPCU, AAI, API, CRIS.

Do you know that flooding, not hurricanes, is essentially the most frequent and expensive pure catastrophe? One report acknowledged that nearly 90 % of pure disasters contain flooding, and since 2000 flooding has value U.S. taxpayers $850 billion. A overwhelming majority of flood occasions are uninsured. Over 75 % of flood harm from Hurricanes Irma and Harvey in 2017 was uninsured. Hurricane Ian in 2022 got here ashore within the Lee County (Ft. Myers) space. Information provided by FEMA confirmed that solely 30 % of the properties in that county had flood insurance coverage, and amazingly solely 50.4 % of buildings in excessive threat flood zones have been protected by flood insurance coverage by way of the Nationwide Flood Insurance coverage Program (NFIP).

If a construction is secured by a federal lender in a high-risk zone, flood insurance coverage is required as a situation of the mortgage. Which means homeowners of these high-risk buildings had no mortgage and elected to not buy flood insurance coverage. Simply six weeks after Hurricane Ian made landfall, FEMA had acquired over 43,000 claims. Their information confirmed that all through the trail of Hurricane Ian in Florida, solely about 20 % of the flooded buildings have been protected by flood insurance coverage. In central Florida, over 70 miles from the coast, rainfall exceeding 15 inches brought on intensive flooding.

Flooding comes from quite a lot of sources, and it isn’t restricted simply to these residing in coastal areas. Over the previous few years, there have been extreme flood losses in Tennessee, Oregon, West Virginia, and Las Vegas. In Loss of life Valley, California, in 2022, simply 1.7 inches of rain in a three-hour interval brought on huge harm to one of many driest locations on earth; dozens of automobiles sat in about three ft of mud. Flooding happens from storm surges in hurricanes, overflowing rivers, and really generally in Florida (in addition to all through the nation) from the fast accumulation of water from a thunderstorm. Some areas are identified to flood after what appears to be just a bit little bit of rain.

A overwhelming majority of communities within the U.S. take part within the NFIP. Each construction sits in a flood zone, it’s only a matter of what the particular zone is. Excessive-risk zones begin with the letters A or V, whereas low-to-moderate threat zones embody zones B, C, and X. Too many shoppers suppose, “I’m not in a flood zone,” however they’re. The confusion doubtless comes from the requirement that any construction that sits in a high-risk zone should be protected by flood insurance coverage if there’s a lender concerned. Complicated “required to have flood insurance coverage” with “ought to have flood insurance coverage” is widespread. Bear in mind, too, that FEMA information has proven for many years that about 25 % of all {dollars} paid underneath the NFIP go to these buildings in zones B, C, and X … the place lenders usually don’t require flood insurance coverage.

After virtually each main flooding occasion, there are all the time information tales of shoppers standing in knee-deep water saying, “I assumed my owners coverage lined flooding.” Typically, owners insurance coverage insurance policies and business property insurance coverage insurance policies don’t cowl losses brought on by flooding. That’s significantly troublesome with occasions like Hurricane Ian, which brought on harm from each wind and flood. With out flood insurance coverage in place, shoppers are sometimes left attempting to persuade a owners insurance coverage firm to cowl losses brought on by flood…a troublesome debate to be concerned in (and often unsuccessful). Carrying each property and flood insurance coverage insurance policies places the patron in the perfect place.

The NFIP supplies about 85 % of the flood insurance coverage within the U.S. The utmost limits out there haven’t modified since 1994, with these limits being $250,000 of constructing protection on one-to-four household dwellings and $100,000 of contents protection out there, and $500,000 of protection out there for business buildings (similar to places of work and eating places) and $500,000 of contents protection out there. FEMA information exhibits that over one-third of all insurance policies are written at most limits, with that determine being even larger in coastal states and high-net-worth areas. That signifies that extra flood insurance coverage above the NFIP limits is commonly wanted. Premiums fluctuate based mostly on the specifics of the constructing, however score elements embody the quantity of protection, sort of construction, elevation above floor degree, and proximity to any flooding supply. At instances, the price will be measured as “only a few {dollars} per day…lower than many individuals spend every day at their favourite espresso store!”

Some personal insurance coverage corporations (Not the NFIP) write flood insurance coverage in sure areas of the nation. Typically, these insurance policies present protection that’s higher than NFIP by way of larger protection limits, higher protection, and at instances a cheaper price. Whether or not the NFIP or a non-public insurer is a greater choice takes a dialogue with a professional insurance coverage agent.

The Takeaways: 

• Flooding causes billions of {dollars} of harm every year.
• Too many shoppers don’t buy flood insurance coverage, leading to important out-of-pocket prices.
• The price of flood insurance coverage is, at instances, cheap.
• Everyone seems to be in a flood zone.