Insurance industry experts estimate that 82% of global financial losses from floods during the period 2011 through 2020 were uninsured. Floods are the most common and costly type of natural disaster in the United States and can cause extensive damage to homes and properties, leading to significant financial losses and emotional distress for homeowners. Flood insurance is specifically designed to help cover losses caused by flooding and can offer financial protection for homes, personal belongings and disruption in business. This, in turn, can help provide assistance for what could otherwise be a very challenging situation. The past few years have seen more frequent and severe flooding in places that commonly flood as well as in places that historically do not flood.
That is what all the flood insurance hoopla is about.
Major hurricanes are one cause of flood losses. For example, in 2022, Hurricane Ian was estimated to have caused between $8 and $18 billion of insured flood losses and another $10 to $17 billion in uninsured flood losses. That is a total of $18 to $35 billion of total flood losses from just one major hurricane. In 2012, Hurricane Sandy caused severe flooding to the New York subway system and then in 2021, Hurricane Ida flooded the subway system yet again.
In April of 2023, a historic flash flood event occurred in Fort Lauderdale, Florida. Although this was not a hurricane, the severe rainstorm dumped more than 25 inches of rain, resulting in the unprecedented closure of the Fort Lauderdale International Airport as well as schools and City Hall.
In January of 2023, northern California suffered record flooding. Flooding events can be detrimental to individual communities as well as the lives of the people in those communities. Flood insurance can be an important risk management solution that can help protect against losses caused by a covered flood event.
The bottom line is that flooding can be an unpredictable event.
Although FEMA has created flood maps for most of the land area of the United States in an attempt to identify high risk flooding areas, flooding can also occur in areas that FEMA has designated only a moderate or low flood risk.
So, what does this mean for homeowners, business owners and renters?
Why flood insurance can be important for homeowners, business owners, and renters.
Most standard homeowners insurance policies, business owners policies and renters insurance policies exclude coverage for losses caused by flooding. Flood insurance is a separate policy specifically designed to address the unique risks associated with flooding and resulting water damage. Therefore, individuals should consider the financial impact that a flood could have on their home, belongings or businesses and should consider purchasing a flood insurance policy to help protect against losses caused by a covered flood event.
Where can individuals learn more about flood risk and flood insurance options?
There are a couple of options available for purchasing flood insurance. Flood insurance can be purchased through the National Flood Insurance Program (“NFIP”), a federal program established to provide flood insurance coverage for homeowners, renters, and business owners located in high-risk areas. Alternatively, flood insurance coverage may be purchased through the private market (i.e., insurance companies) that may offer higher maximum coverage limits than policies provided through the NFIP. However, it is important to carefully consider the terms and conditions of any flood insurance policy available through the private market, as their terms, conditions, and exclusions can vary (sometimes significantly) from one insurance company to another.
Additionally, while flood insurance may be available through the private market in some areas, it might not be accessible or affordable in high-risk flood zones. Individuals should therefore weigh the benefits and considerations and consult with an insurance professional to help make an informed decision about whether private flood insurance is a good risk management solution for them.
It would be helpful to seek out an insurance agent who truly understands flood risk and flood insurance. Acrisure has some of the insurance industry’s leading flood insurance agents who understand flood risk and flood insurance, leveraging industry-leading technologies to provide personalized flood insurance options from the some of best flood insurance companies in the marketplace.
Reach out to Acrisure to learn more about your flood risk and what options are available to help you protect against losses from potentially devastating flood damage to your home or business. Acrisure’s experienced team of flood professional can answer your questions and help you find the right flood insurance solution for you.
Stay tuned for more valuable information about flood risk and flood insurance.
Stay tuned to Acrisure Insights because we share more information about flood insurance, including why you should consider purchasing it, what flood insurance covers, and why some people are required to purchase flood insurance while others are not.
About the Author
President, Flood Practice Leader
Mr. Freudenthal is the national Flood Practice Leader at Acrisure. He is a nationally recognized expert in the area of flood risk and a regular speaker at leading risk management and commercial real estate conferences specializing in flood risk. Mr. Freudenthal has also published numerous articles in real estate, risk management and insurance industry publications.