The destruction of Harvey and Irma have filled our news feeds over the past few weeks. Resources are being collected, relief efforts are being coordinated, crews are going to the places more impacted to offer aid, and individuals are opening their homes. According to the head of the National Flood Insurance Program (NFIP), “early estimates show hurricane Harvey will result in about an $11 billion in payouts to insured homeowners, mostly in southeast Texas…” This would make Harvey the second costliest storm in the history of the NFIP program. The estimates are still pending for the amount of payouts that will be made for the damages done during Hurricane Irma.
According The Associated Press, the total number of federal flood insurance policies in force nationally dropped by about 10% over the last 5 years as a result of the premium increases that went into effect in 2012. As a result, many homeowners chose to drop their elected coverages in presumably “low-risk” flood zones that were not required to carry flood insurance by mortgage companies to save on annual premiums. As a result, it is estimated that 80% of people impacted by Harvey that sustained flooding damage to their homes did not carry flood insurance.
Roy E. Wright, FEMA’s associate administrator for insurance and mitigation concerning the disaster stated, “collectively, we….have to get beyond this conversation about what I ‘have to do’ and what ‘I’m mandated to do’ [by the mortgage company]”.
The truth of the matter is that all homes are prone to flooding regardless of their zone. Furthermore, many home owners are unaware that even if a mortgage company does not require a home buyer to carry flood insurance as part of the purchase requirements, the homeowner can still be held responsible for the mortgage payments on a home damaged by flood. Flood damage is never covered on any home insurance policy through any carrier.
Flood insurance is only available as a separate policy through FEMA or through private market flood. Therefore, as countless homeowners so painfully have discovered through Harvey….if you do not have a flood policy in place on your home, you could be looking at hefty expenses to repair flood damage to your home out of pocket.
So what is the take-away for home owners? Flood policies are often an ill-advised place to cut costs, especially for those living on the coast. As much of southeastern Texas saw with Harvey and as much of Hampton Roads saw last year with Hurricane Matthew, all homes can flood regardless of their mapped zone. While the flood zone map be indicative of the likelihood of flooding for a property, the truth remains that all properties are subject to flooding. The question then becomes not whether or not the mortgage company is requiring you to carry flood insurance or whether you can afford to carry the policy but rather……can you afford to cover the damages caused by flooding to your home if you do NOT have a policy in place.
Kelley Carter, CPIA
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**References taken from article By Michael Biesecker. See the full article here.