Florida Flooding In Focus on Uninsured Homeowners After Hurricane Ian

27 Oct

Hurricane Ian hit the Florida coast with sustained winds of 150 miles per hour leaving behind a path of destruction that Florida resident haven’t seen since Hurricane Michael struck the state in 2018. 

Millions of Floridians have been pushed out of their homes due to both flood waters and the destruction done by hurricane level winds. While experts predicted the Tampa area would be ground zero, Ian made a last-minute turn and hit the southwest communities of Sanibel Island, Fort Myers and Cape Coral with all of its force.

As Ian churned up the east coast of the United States, Floridians discovered just how much damage had been done and that a lot of the damage was from flooding, which is almost never covered by  homeowner or renters’ insurance. Unfortunately, many residents of the Sunshine state were not carrying flood coverage and now have to deal with the fact that much of the cost to rebuild or repair their homes may fall to them.

Flood risk in Florida 

Ian’s storm surge brought devastating flood damage. In Fort Myers, a record storm surge of over seven feet high hit the coast. However, flood damage was not contained to the coast, Orlando ended up with a 500-year flood event after Hurricane Ian’s rain caused rivers and lakes to flood homes and businesses. 

The damage done from Ian should serve as a reminder to homeowners who live inland that even though they are not on the coast, flooding is still a very real possibility. Mark Friedlander, Director of Corporate Communications of the Insurance Information Institute (Triple-I) recently said in a Bankrate article, “We have seen catastrophic flood events in many areas of the U.S. in 2022 that are not typically flood-prone. This includes eastern Kentucky, southeast Missouri, southwest Virginia and the Las Vegas Strip. All areas of the country are prone to floods, as 90 percent of U.S. natural disasters involve flooding.”

As climate change takes hold, inland flooding is becoming more common and unpredictable and one way to protect your home and your finances is to carry flood insurance. You can purchase flood coverage through the federally backed National Flood Insurance Program (NFIP) or in the private market.

 Many Americans are uninsured for flood damage

Data shows that many homeowners are confused when it comes to flood damage and homeowners insurance. According to a poll conducted by the Triple-I in 2020, roughly 27 percent of homeowners claimed to have flood insurance but data from the NFIP shows that only 4 percent of Americans are carrying a policy though the NFIP. 

While it is certainly possible to purchase flood insurance via the private market, most experts doubt that the private market is supplying 23 percent of the flood insurance in America which most likely means that many homeowners in America mistakenly believe their homeowners insurance protects them from flood damage. 

The truth is that almost all homeowners and renters insurance exclude flood damage from coverage. Florida, being a coastal state actually has the highest concentration of NFIP policies in the country, the Sunshine State accounts for 35 percent of total NFIP policies.

Unfortunately, despite the fact that Florida holds the most NFIP policies, most homeowners in Florida are not carrying a flood insurance policy. According to Triple-I data, only 18 percent of Florida residents are carrying flood coverage from either the NFIP or a private insurer. The number drops to 4 percent when looking at central Florida homes. 

Low flood insurance coverage rates and coastal living are never a good combination. According to data analytics company CoreLogic, Hurricane Ian may have caused $18 billion in uninsured flood damage. 

Should you carry flood insurance?

Flood insurance is not legally required but if you have a mortgage on your home, your lender will require that you carry flood insurance if your home is located in a high-risk area. 

As many Florida residents have recently learned, despite the fact that it is not legally required, flood insurance is important. Check FEMA flood zone maps to help you assess the risk your home presents. FEMA recently launched Risk Rating 2.0 which takes into account numerous factors when determining the flood risk a property presents. 

FEMA data shows that 25 percent of all economic losses resulting from flooding occur in areas that are designated a mid to low-risk areas so even if you are living further inland, flooding is still a risk.

While flood insurance can be expensive if you live waterfront, if your home is located further inland, coverage is usually affordable. The average price for a flood insurance policy is currently running $700 a year which is a bargain compared to the costs that many uninsured Floridians are now facing. 

Homeowners should be aware that flood insurance is not something you can wait until the last minute to purchase. Once a stormed has been named, insurers stop selling new coverage in the effected markets. In addition, all NFIP and most private market policies come with a 30-day waiting period until coverage kicks in to protect your home. 

Disaster assistance and emergency relief programs

There are other disaster and emergency relief programs that Florida flood victims can access. While these programs will not step up to cover your rebuilding or repair costs like flood insurance does, they may provide low interest loans and other assistance.

FEMA grants

After the federal government declares the aftermath of Ian a disaster, FEMA will come in to help out uninsured home and business owners.

FEMA grants do not have to be paid back and are designed to help pay for some home repairs as well as other costs such as temporary housing, food, clothing, and even transportation. 

These grants are not designed to cover all of a homeowners losses, they are mainly to kickstart a recovery and help victims get back on their feet. FEMA grants are awarded on a case-by-case basis and there is no guarantee a homeowner will be approved for one. 

Small Business Administration (SBA) Disaster Loan

The Small Business Administration (SBA) is not just for businesses, they also make low interest loans to homeowners and renters. According to the SBA, their loans can provide:

  • Up to $200,000 for homeowners to use for repairs or to replace their primary home
  • Up to $40,000 for homeowners and renters to repair or replace personal property

While SBA loans need to be paid back, they often come with a lower interest rate than traditional loans. These loans can help homeowners and renters cover repair costs as well as replace some of their personal property that was destroyed. 

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