Why Every Homeowner Needs Flood Insurance – Q&A with Partner P.J. Miller
P.J. Miller
How often does Wallace & Turner deal with flood insurance matters, and in what capacity?
In terms of frequency, it somewhat kicks up on a seasonal basis when there is heavier rainfall. We deal with matters somewhere between daily and weekly. Part of the reason for the almost daily occurrence is that when a sump pump backs up or goes out, water comes up through the floor drain and homeowners are wondering if this is covered by flood insurance or separate coverage.
Being an independent insurance agency, Wallace & Turner writes both personal and commercial flood coverage.
It's reported that only 7% of homeowners have flood insurance — why is it important to have a policy in place?
Flooding is the largest natural catastrophe, and largest single event natural catastrophe, that ever occurs. There are some places that would say earthquakes, but from the standpoint of frequency and severity, flooding is more predominant over every other natural catastrophe.
Part of the problem with the seven percent statistic, is that those seven percent are paying the premium for flood insurance coverage, and taking care of all of the floods that occur in the U.S. every year. In other words, people aren't buying flood coverage and when it occurs, the government (FEMA) has to step in and pay for those flooded areas in the form of monetary support, or offer low interest loans for people to get their homes put back together. It's clearly upside down with premiums versus people that haven't purchased coverage.
What are some of the main reasons every homeowner needs flood insurance?
The majority of claims, or when the federal government has to step in, come from areas that aren't typically seen as high hazard areas. Two-thirds of flood activity occurs in areas that are not high flood zones. Meaning, it's flooding in places that may have never flooded before.
What are some of the negative things that can happen if you don't have it?
The largest negative is that you wouldn't have any coverage for the damage of your house or its contents.
If you are in an area where you should have had flood coverage because it's a high flood risk zone, and if it is a repetitive loss situation, the government (FEMA and NFIP) may not cover assistance or loans due to the repetitive nature of the floods in your area.
One program that the federal government has in place is when the repetitive floods occur in a high risk zone, and for example, the person has been flooded three times, and each time the flood insurance or the government has to repair or rebuild the house, the government can come in and say "We've had enough. We're going to offer to buy your property and most likely raise it, and you'll need to move on." That program is at all-time high in its usage. Part of the problem, however, is that it takes quite a while for the government to get around to arranging to buy properties, and in the meantime, floods aren't stopping. Ohio is fifth in the nation on the list of the government trying to step in and buy homes. Additionally, areas like Texas, Louisiana and the Carolinas/coastal areas rank highest.
What else should homeowners and business owners be aware of in terms of flood insurance?
Flood premiums are most likely going to rise by 25% per year in the higher flood zone areas. This is already happening now. If you have a loan on your property, the banks/lenders are required to force you to have flood insurance if you're in higher rated flood zones (e.g. A, AE, V).
The government has kept everything fairly well structured and hasn't made a lot of changes to the flood program in terms of how coverage applies to floods. Therefore, there are quite a few companies (private insurance carriers) that are opening up flood insurance markets, and expanding coverages and some benefits that the federal government doesn't have. Similar to how UPS and FedEx operate versus USPS.
If you have questions about flood insurance for your home or business, contact Wallace & Turner’s insurance agents to learn more.
Flood Solutions: Insurance Against the #1 Natural Disaster
Flooding is the largest natural catastrophe and largest single event natural catastrophe that ever occurs, and only 7% of homeowners have flood insurance! Floods are not covered in your homeowners policy, but anyone can get the coverage as a supplement to their homeowners.
Flood insurance coverage to complement your homeowner policy.
We work with Cincinnati Insurance Company to offer Preferred Primary Flood or Excess Flood Endorsements as alternatives to insurance available from the National Flood Insurance Program.
Learn more about types of flood insurance, costs andwhy it’s important to have this coverage. Read How Much is Flood Insurance in Ohio?