Although Americans may be well exposed to hurricane preparedness information and understand the importance of homeowners’ insurance, brokers should remember to stress flood insurance is usually separate from property insurance policies.
A common misconception among homeowners, particularly in the flood-prone hurricane alley of the southeast, is if their homes get flooded, federal disaster assistance will cover damages.
“Federal disaster assistance typically is a low interest loan that helps cover damage costs, and not compensation for your losses. Additionally, those loans are only available if the President formally declares a disaster and it must be repaid,” explained Ron DeFreitas, owner of Gulf Coast Educators Insurance.
Despite the fact floods are the most common natural disaster in the US, many homeowners do not understand what is, or isn’t covered under their policies.
Personal liability kicks in if an individual’s standard homeowner insurance policy does not cover damage from heavy rains as a result of flooding from a related weather event. Therefore leaving people responsible for covering the entirety of the cost for damages, exacerbating the risk for financial hardship.
Additionally, homeowners are unaware if they need flood insurance when they live in a low-risk flood zone area. Providers should remind them that even though insurance is not federally mandated, 25% of all National Flood Insurance Program claims are from people mapped outside of high-flood risk areas, according to Floodsmart.gov.
Flood risk is subject to changes based on natural developments, environmental fluctuations and infrastructure advancements.
For instance, Boynton Beach, a local community in Palm Beach County, had a large portion of its residents removed from the latest version of the Federal Emergency Management Agency’s preliminary flood maps. A significant portion of properties have been recently developed and fill has been brought in to raise the elevation of the land.
As we have seen with the recent devastation in the San Francisco Bay region, natural disaster lulls do not necessarily mean foregoing preventative disaster premiums is a good idea.
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