Unless you’ve been off of the grid for the past couple of weeks, you have seen the extraordinary damage that Harvey has inflicted. Over 200,000 homes have been damaged with more than 13,500 destroyed. Thousands of people have been displaced from their homes with an untold number of deaths as a result of the catastrophe.
But are the ravaged people of Texas covered by insurance? Estimates show that only 1 in 5 Texas homeowners have flood insurance protection. In 2016, statistics showed that 14% of homeowners in South Texas have flood insurance and many of those purchased it because they were forced to do so as their homes were located in a flood zone and the mortgage lender required the coverage.
The majority of flood insurance policies are written through the National Flood Insurance Program which is housed under the Federal Emergency Management Agency (FEMA). In other words, most flood policies are purchased through a government program. The program is currently about $25 Billion in debt. Congress faces a deadline of the end of September to renew the federal flood program. They are getting paid the big bucks to determine how to make the program solvent without making flood policies unaffordable. That’s quite a mountain to climb. There are a few private flood programs out there which offer a bit more coverage with fewer fees (in fact, we have such a program in our agency).
So, going back to the original question of whether or not the good people of South Texas are covered. Yes if they have flood insurance. If not, their options are limited. They can possibly purchase a low or no-interest loan through the federal government or turn to a group such as the American Red Cross. For relatively low premiums, they could have avoided this extra layer of stress by knowing that they have flood insurance.
Here are some other flood facts that are interesting:
· Flooding is the #1 disaster in the United States according to FEMA.
· More than 1/3 of National Flood policies are in Florida. Texas accounts for 12% of policies.
· National Flood policies start at $112 a year but premiums increase according to flood risk. That means you pay more if you live in an area prone to floods.
· Flood policies cover up to $250,000 for the structure of a home and $100,000 in personal property though private insurers provide more coverage.
· It takes 30 days for a flood policy to take effect and the program could sunset at the end of September unless lawmakers take action (which they usually do at the last minute). This means that it is likely too late to buy flood insurance for the 2017 hurricane season.
If a pipe suddenly bursts in your home causing it to flood, there is likely coverage for this type of event but if waters rise and enter your home, there is likely no coverage unless you have a flood insurance policy. If you are interested in a quote, feel free to give us a call or stop in to see us.