Water Always Wins

There is no education like experience. Unfortunately, many people in the Texas coastal region and neighboring states will have the unfortunate episode of learning through experience as a result of the wind and subsequent flood damage created by hurricane Harvey. Just for a relativity test, Hurricane Katrina left a $15 billion price tag in Louisiana and Mississippi alone, relating solely to the claims paid by the National Flood Insurance Program (NFIP), which is managed by the US Federal Emergency Management Agency (FEMA). Harvey’s destruction is projected to be far more severe.

I’ve mentioned in the past, “Water always wins.” That unfortunate fact seems to surface at the most inopportune times for those dealing with flood losses. It’s enough to lose heirlooms and precious belongings. It’s even worse to lose in the claims process when you realize that you do not have coverage for a flood event.

Standard homeowners policies, while typically including some coverage for backup of sump pumps and sewers (and not all policies are created equal), do not cover losses from floods (water entering the home from rivers, streams streets, etc.). Additionally, those policies typically do not cover named storm wind damage without an endorsement for hurricane/wind coverage. This type of coverage is more common in coastal regions of the country and is subject to much higher deductibles than the standard policy.

There are flood insurance policies that can be purchased through private insurance companies or directly through the NFIP.  Dwelling coverage for the building will cover up to $250,000 and personal property is covered to $100,000. For those that want to increase coverage, there are excess flood insurance plans available through private insurance companies to supplement the primary coverage. Depending upon where you live, flood insurance might be mandatory, based on FEMA’s mapping of the various flood zones throughout the U.S.

Floods do occur in non-coastal areas. According to FEMA, the average flood claim from 2008-2012 was $42,000. The average flood insurance policy cost $650/yr. in 2012. There are various ranges for the subsequent years; however, in 2017, prior to Harvey, the average through the first five months was $24,698. The average for 2017 is obviously going to go up significantly as a result of the disaster in Houston and surrounding cities. A big question remains, how many people actually have coverage for the loss?

So, perhaps now is the time to analyze your risk of a flood. Be careful not to analyze your risk when a storm is approaching, as most companies put out a moratorium on writing new coverage when there is a risk of loss on the horizon. The same rule applies to wind coverage. Don’t wait until hurricane season to try to secure wind protection.

And remember, water always wins!