Texas flooding: What isn’t covered, and why it matters to Florida

Early estimates put the damage from Hurricane Harvey at up to $30 billion, with flood, not wind, as the major source of harm — and industry officials expect less than half the flood damage will be covered by insurance.

“For our own book of business, maybe one in four of our homeowners actually selects the Flood Insurance Program,” Farmers Group CEO Jeff Dailey told CNBC . “I think you’ll see an awful lot of uninsured losses.”

Flooding in Texas is expected to cause tens of billions in damage. (ABC News)

The loss of at least eight lives matters more than money, but scenes of highways and homes under water bring a harsh reminder to Florida: Standard homeowner policies do not cover floods. Unless a mortgage lender makes a homeowner buy flood insurance because the property is in a high-risk zone, it’s up to the consumer.

Harvey will likely rank among the top 10 most expensive U.S. storms with $10 billion to $20 billion in losses covered by insurance, JPMorgan analyst Sarah DeWitt said. That doesn’t count uninsured losses or economic damage, such as closed businesses, not covered by a policy.

But only $1.2 billion to $2.3 billion in damage will come from winds and storm surge, AIR Worldwide estimated. The Verisk Analytics business noted that does not include the impact of “ongoing torrential rain and catastrophic flooding from Hurricane Harvey’s unprecedented precipitation.”

If a storm blows your roof off and water pours in from above, your standard homeowner policy typically covers it. If water gets to the ground and a river or canal overflows and the water rises into your house, that’s generally covered by a flood policy — or not necessarily covered if you don’t have one.

Federal disaster aid, if granted, can cover some emergency housing and repairs, but is not designed to return a home to its original state, the Federal Emergency Management Agency says. In some cases homeowners can apply for government loans that must be repaid.

“FEMA does not pay to return your home to its pre-disaster condition,” the agency says. “FEMA provides grants to qualified homeowners to repair damage not covered by insurance, but these grants may not pay for all the damage.”

How do you buy it? Some private companies have begun underwriting flood policies, but most policies come from the government’s National Flood Insurance Program. Your insurance agent can help you buy it, or try the NFIP’s call center at 1-800-427-4661 to request a referral.

Florida’s insurers have begun working to offer more flood options. Florida Peninsula Insurance Co. based in Boca Raton said last week it has begun offering flood insurance coverage as a potentially less expensive “endorsement” on a home policy rather than a stand-alone flood policy. The flood coverage is ultimately provided by NFIP or a private partner such as a Lloyd’s of London affiliate, company officials said.

Florida has more of the nation’s 5 million flood policies than any other state, close to 40 percent. Still, hundreds of thousands of Florida buyers with a choice — meaning not required by a lender — balked and let policies lapse in recent years after Congress aggressively raised costs for many in the program. Congress is working on reauthorization of the flood program, and an overhaul of the rates, in September.

New flood maps effective in early October are bringing anxiety about changes to more than 50,000 properties in Palm Beach County. County officials cautioned changes can mean a piece of the property is in or touches a flood zone, not necessarily that the house itself costs more to insure.

There were more than 100,000 flood policies in Palm Beach County as of March 31, including more than 66,000 in unincorporated areas, nearly 15,000 in Boca Raton, more than 9,000 in Boynton Beach, and more than 7,000 each in Jupiter, Palm Beach and Delray Beach.

While you’re checking on flood insurance, how safe is your property insurer? Consult the The Palm Beach Post’s Insurance Explorer for financial safety ratings and complaint information about more than 100 property insurers in the state.




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