The daily thunderstorms over South Florida this time of year remind us why we call this the rainy season. Miami International Airport has recorded precipitation every single day this month from July 1-23. The rainy season is also hurricane season.
Most South Florida residents are accustomed to being bombarded with preparedness information on the hurricane season. Near the top of our preparedness checklist is making sure that we have appropriate insurance on our homes. Lessons from past hurricanes have convinced me that a lot of people don’t understand that standard insurance policies do not cover flood insurance. For example, there were countless ‘wind versus water’ lawsuits after Katrina and Superstorm Sandy.
In my opinion, a homeowner should be able to purchase one insurance policy to cover all hazards. Unfortunately, that is not the way it works in our country. Standard insurance policies do not cover damage from storm surge or heavy rains from a tropical cyclone or from any other type of flood for that matter. That means that without flood insurance, homeowners are responsible for the entire cost of repair from flood damage. In 1968, Congress created the National Flood Insurance Program (NFIP). The NFIP offers flood insurance to homeowners, renters, and business owners if their community participates in the NFIP. Participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.
Floods are actually the most common natural disaster in the United States. According to data from the NFIP, people outside of high-risk areas file over 20% of NFIP claims and receive one-third of disaster assistance for flooding. For homes and businesses in moderate- to low-risk areas, lower-cost policies are available for as low as $129 per year. It is important to note that there is typically a 30-day waiting period between the time you write a check for the flood policy and the day that policy goes into effect.
On March 21, 2014, President Obama signed the Homeowner Flood Insurance Affordability Act of 2014 into law. This law repeals and modifies certain provisions of the Biggert-Waters Flood Insurance Reform Act, which was enacted in 2012, and makes additional program changes to other aspects of the program not covered by that Act. Many provisions of the Biggert-Waters Flood Insurance Reform Act remain and are still being implemented.
A wealth of information on how to prepare for floods and how to purchase a flood insurance policy can be found at FloodSmart.gov. You can even determine your individual flood risk by entering your address (under “One-Step Flood Risk Profile” on the Flood Smart homepage). An interactive tool is available that will allow you to estimate the damage costs given varying amounts of flooding in a home.
After doing a little research at that web site, I encourage people to contact their agent who carries their homeowners or business insurance and ask about flood insurance. Don’t wait until it is too late. Floods can happen almost anywhere, and they are not limited to coastal areas or to tropical cyclones.