How to handle flood damage after a hurricane if you're uninsured

Frederick Owens
September 13, 2017

In the aftermath of Hurricane Harvey's hit on Texas, and with Hurricane Irma threatening Florida, let's all acknowledge one reason for the vulnerability of Americans who live in low-lying coastal regions of the Sunbelt: The federal government has been paying people to locate there.

Wright said uninsured homeowners around the country should learn from what is happening in Houston and other flood-ravaged parts of the country and seriously weigh whether they should buy a policy.

"They might take some of the areas that were low risk zones, what we call zone x, and change them to a higher risk zone and that could increase premiums for those people, FEMA gets subsidized by Congress, so Congress can absorb all these losses".

Now that the flood waters have receded in Houston comes a reality for thousands of homeowners with damaged homes: they don't have flood insurance.

Wright said that nationally there are about 10 million residential structures, twice the number of properties now covered, in areas that could potentially flood.

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Congress has given the debt-saddled National Flood Insurance Program, set to expire September 30, a three-month extension. Since the start of the storm, the administration has handed out more than $49 million in loans, according to spokeswoman Carol Chastang, and $450 million of the $15 billion appropriated to Harvey relief in a bill passed by the U.S. Senate on Friday will go to the Small Business Administration's disaster program. Just two years ago, the Federal Emergency Management Agency estimated that as few as half of the 1.5 million residential structures required to carry flood insurance actually do.

"There is no flood coverage unless they have a flood insurance policy", he said. Since 2012, the number of properties covered under the flood insurance program has dropped 10 percent, from almost 5.5 million to about 4.9 million. Unlike a typical homeowner's policy, a mobile home policy may include flood coverage.

Remember, many insurance companies permit their claims representatives to write checks or issue debit cards for additional living expenses to policyholders on the spot.

The National Flood Insurance Program policy limits have been in effect since 1994 and need to be updated to account for the increase in the replacement cost of homes and the actual cash value of their contents. Because of major storms like Katrina, Sandy and Matthew, the NFIP is $25 billion in debt to the government. CoreLogic estimates that National Flood Insurance Program-insured flood losses from Harvey alone will be $6 billion to $9 billion. Wright said he's confident Congress will approve spending the money FEMA needs to pay Harvey and Irma claims. How likely are even modest policy reforms about premiums or redrawing flood plain maps to better reflect real risk? Nationally, only about 12 percent of homeowners have flood insurance, according to the Insurance Information Institute. Without the NFIP, flood insurance would otherwise be hard to come by; in some areas the flood risk is so high that private insurers don't want to touch it. It is to help them rebuild. "They are natural events, but they are mostly man-made disasters". Zone AE has the highest risk and rates.

The government has known for decades that homeowners in flood zones often don't have the insurance they should.

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