Lessons from Hurricane Harvey: Do You Need Flood Insurance?

Holly Johnson

October 4, 2017  •  4 Minute Read

Financial Tips

As the water recedes in Houston and various waterfront communities across Texas, a startling financial reality continues to unfold. Where hurricane Harvey hit the hardest, 80 percent of homeowners and property owners lacked flood insurance coverage.

Families without coverage are left in a costly predicament. Without flood insurance, they will likely receive little to no financial relief that might help them rebuild their homes and their lives. Instead, they’ll be forced to rely on private charity, government aid, or their own resources to clear out water and debris, replace personal items, and rebuild their properties to the standards they were at before.

With so few homeowners carrying flood insurance, it makes you wonder why millions would face the potential risks of flooding on their own. As always, explanations abound. For starters, not all homeowners – and even homeowners living in flood-prone areas - are required to buy flood insurance by the federal government. When given the option to go without, many will do so simply to avoid the added expense.

Second, flood insurance isn’t cheap – even after it’s been subsidized. The National Flood Insurance Program uses subsidies to make flood insurance more affordable for homeowners and property owners. However, the average flood insurance policy subsidized by the government still runs around $700 per year, or $58 per month – and that’s on top of regular homeowner’s insurance premiums.

A final reason many homeowners went without coverage – and why many will still make that choice – is the simple idea that the risk of flooding isn’t that great. What’s the chance of a 500-year-flood happening in your lifetime?

Hindsight is always 20/20, but many of us learn this lesson the hard way.

Do You Need Flood Insurance?

The commotion and financial upheaval caused by hurricane Harvey might leave you wondering if you’re covered for such an event. Whether you live in a flood-prone area or in a region where flooding is possible, it’s smart to at least consider buying flood insurance.

According to the Federal Emergency Management Agency, or FEMA, you could benefit from a policy for numerous reasons – even if you think you’re not at risk.

As FEMA notes, floods are the nation’s most common and costly natural disaster, causing millions of dollars in damage across the U.S. every year. And despite what anyone says, regular homeowner’s insurance and renter’s insurance doesn’t cover damage caused by flooding.

Also, floods can happen anywhere. According to FEMA, more than 20 percent of flood claims are outside of areas at high risk for flooding each year.

Lastly, you may actually be required to have flood insurance due to a Congressional mandate. If your home sits in certain flood-prone areas, your insurance company or lender may require you to buy a policy whether you want to or not.

Considering Flood Insurance? Here’s How to Decide

If the flooding caused by hurricane Harvey or the wave of destruction left behind by hurricane Irma or Maria has you nervous about your own property, now is the perfect time to consider whether a flood insurance policy might help you sleep better at night. While these policies can’t prevent floods or cover possessions that money can’t replace, they do offer meaningful coverage that can help you rebuild no matter how much damage you have.

As Kiplinger notes, low-risk homes covered through the National Flood Insurance Program qualify for $250,000 in coverage for the dwelling and $100,000 in coverage for possessions. While the average cost of these premiums is around $700 per year, properties in high-risk areas may come with annual premiums of $2,500 or more.

If you’re considering flood insurance but on the fence about forking over the added premiums, here are a few steps to take right away:

Check the risk in your area with FEMA’s interactive data visualization tool.

FEMA’s data visualization tool makes it easier to determine whether you may need flood insurance – or whether going without presents a manageable risk. By entering your state and county, you can find out how many flooding events have taken place in the past and the average cost of claims in your area.

Find an insurance agent in your area.

While insurance agents might be keen to sell you a policy whether you need one or not, an honest agent can let you in on the risk in your potential area. Not only that, but they can provide quotes for flood coverage offered through the National Flood Insurance Program (NFIP), provided your area participates.

If you don’t have an agent, FEMA suggests calling the NFIP Referral Call Center at (888) 379-9531.

Protect your home from flooding.

FEMA’s homeowner’s guide to retrofitting your home provides actionable tips you can use to protect your property from the ravages of flooding. You can find information on elevating your home, flood-proofing your home, and retrofitting methods here.

The Bottom Line

Hurricanes Harvey, Irma, and Maria caused billions of dollars in damage, and not just with hurricane-force winds. As the federal government notes, it’s often flooding that leaves the worst and most long-lasting damage behind.

While you can’t run or hide from a hurricane, you can take steps to protect your home and possessions. This includes elevating your home to protect from floodwaters, flood-proofing your home to make it more difficult for water to get inside, and buying flood insurance to help you rebuild if the worst-case scenario happens.

Let’s also not forget that hurricanes and storms aren’t the only events that can cause flooding. Even if you live far from a large body of water or an area where hurricanes hit, your home and possessions aren’t safe from the effects of flooding.

“Storms are not the only cause of floods,” writes FEMA on their website. “Flooding can be caused by dams or levees breaking, new development changing how water flows above and below ground, snowmelt and much more.”

The bottom line: Nobody is safe from natural disasters like flooding, but we all have the potential to protect ourselves with the right type of insurance coverage.