As the peak of the 2018 Hurricane Season creeps closer and last weekend marking the one year anniversary of Hurricane Harvey’s destruction it created in Houston makes this a good time to consider a few lessons related to flood insurance.

1. Hurricane Lane, ‘just’ a Category One storm as it moved past the Hawaiian islands, dropped between 3 and 4 feet of rain throughout the island chain last week. According to the National Weather Service Lane’s torrential rains were the third highest total rainfall from a tropical storm in the US since 1950 and while it thankfully did not directly make landfall it illustrates the extent of flooding such storms and their rain can cause.

The town of Mountain View on the Big Island recorded a staggering 51.53 inches of rain from Wednesday to Sunday of last week but the U.S. record is 60.58 inches that fell on Nederland, Texas, over several days during Hurricane Harvey in 2017. These storms and the rain ‘bombs’ that they can bring illustrate that no matter which flood ‘zone’ your home or property might be located in they can most assuredly flood and that’s especially the case in tropical regions such as Hawaii, the Gulf Coast and South Florida.

2. In the case of Hurricane Harvey, a Category Four storm that did extensive damage all along the Gulf Coast, one year later the numbers are in and they are staggering. Harvey caused an estimated $ 125 Billion in damage in Texas alone, killed 68 people including 36 in Houston and flooded more than 150,000 homes in the Houston area alone.

3. The former Insurance Commissioner of Texas, Robert Hunter, believes that as many as 80% of Harvey’s victims did not have any flood insurance while the risk analytics company CoreLogic estimates that 70% of the damage was uninsured. Whatever the actual figure, it’s a large one and one of the Post-Harvey lessons from the storm is that consumers now have an increased interest in carrying flood insurance in Texas. Throughout the Gulf Region the National Flood Insurance Program saw 74,000 flood claims filed from Harvey and has, thus far, paid $ 8.4 Billion in claims (Florida’s Hurricane Irma led to another 21,000 flood claims being filed and nearly $ 1 Billion being paid).

4. Another related lesson from Harvey (and this is a lesson that home and business owners sadly often ‘learn’ after a storm whether Katrina, Wilma, Irma or Harvey to name a few) is that much of the damage took place in areas that historically might not have been prone to flooding in, for example, so called ‘X’ zones. Lenders do not require flood insurance for properties designated as an ‘X’ zone, areas that the federal government’s Army Corp of Engineers deem as unlikely to suffer a one in a 100 year chance of flooding each year. We’d advise to not fall into a ‘trap’ of thinking your property can’t flood just because a lender does not require that you carry coverage. The flood maps the government uses are often outdated or too conservative and this, combined with new infrastructure such as roads and buildings, can often change things. As Mr. Hunter was recently quoted as saying, such new infrastructure can “drive floods up, just like if you sit down in a bathtub the water goes up”.

Properties in areas less susceptible to flooding are rewarded with the lowest premiums, often a couple to a few hundred dollars per year, so at the very least we’d suggest that you obtain a quote and consider whether carrying such coverage is wise. Or, for that matter, consider what could happen if 50 or 60 inches of rain landed on your property in a short period of time no matter where you are located or your ‘zone’.

5. Keep in mind this is also not just from Harvey or Irma but nearly all such storms, is that while you might carry homeowners, condo-unit owners, renters or property insurance those policies nearly always exclude losses from a flood. Far too many folks around the country seem to learn that lesson after the waters recede, after they have filed a claim on their ‘insurance’ policy so keep in mind that to have coverage for a flood you need a flood insurance policy.

It is also important to keep in mind that unless you are closing on a mortgage loan, FEMA has a 30 day waiting period from the time you apply until coverage will begin so don’t wait until ‘Hurricane Bob’ is approaching in a few days if you want coverage, apply a month or more in advance of when you want (and need) coverage.

6. As I have written previously, a small but emerging private market for flood insurance has been growing in recent years despite the fact that such insurers abandoned the marketplace in the late 1960’s which led to the creation of the National Flood Insurance Program. Private flood insurance generated about $ 624 Million in premiums at the end of 2017, up from $ 412 Million in 2016, and compares to the $ 3.6 Billion in premium with the National Flood Insurance Program. In Florida, for example, premiums for private flood insurance totaled $ 84.5 Million while premiums in the government’s National Flood Insurance Program totaled nearly $ 1 Billion.

7. Another important flood lesson to keep in mind is that while primary flood insurance, whether from FEMA or an emerging private insurer, has a set maximum there is also a market for excess flood coverage. Residential buildings, such as a home, can be insured with replacement cost coverage up to $ 250,000.00 while non-residential buildings are eligible for $ 500,000.00 of primary flood coverage. Basic, depreciated, contents insurance is also available with maximums of $ 100,000 (residential) and $ 500,000 (nonresidential). In most cases excess coverage ‘above’ the primary insurance is available and, where warranted by the replacement value of your home or building, should be considered.

8. Lastly as we started this entry with ‘math’,  I will end with some important figures. The cost of a primary flood insurance policy varies depending on where your home or building is located, it’s elevation above (or below) sea level and other factors but start at a couple hundred dollars per year. Based on the 5,081,470 policies in force at the end of 2016, the most recent year published, the average flood premium in the United States was $ 655.00 which includes the highest risk (and most costly) policies as well as the Preferred Risk ones (least costly) too. Here in Florida a policy can range from about $ 200.00 to $ 400.00 or so per year.

Our live, local, professional agents and underwriters are available by phone, on-line or in person so please contact us with any questions that you might have about flood insurance or anything as we are happy to assist. As always, thank you kindly for allowing us to provide your protection.

The map above is of Houston and the devastation that Hurricane Harvey caused. The red area depicts all of the properties with flood damage in Hurricane Harvey.

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