SEATTLE (AP) 鈥� Though natural disasters cycle across seasons and regions in the U.S., it鈥檚 often a shocking discovery for property owners how expansive and expensive flood and water damage can be when a major storm devastates their homes, businesses and communities.
That鈥檚 because oftentimes insurance doesn鈥檛 cover what the policyholder thinks it does 鈥� or thinks it should.
The disappointing surprise is that while the standard home insurance policy does cover fire and wind damage, even good property insurance typically doesn鈥檛 cover things like flooding and earthquakes, which usually require a special and separate policy for each.
Here are the things to know about flood insurance.
Who has flood insurance
Most people who have flood insurance are required to have it.
Although many property owners have the option of purchasing flood insurance, it is mandated for government-backed mortgages that sit in areas that the Federal Emergency Management Agency deems highest risk. Many banks require it in high-risk zones, too.
But most private insurance companies don鈥檛 carry flood insurance, leaving the National Flood Insurance Program run by FEMA as the primary provider.
Congress created the federal flood insurance program more than 50 years ago when many private insurers stopped offering policies in high-risk areas.
FEMA鈥檚 Flood Map Service Center has to check your area. FEMA notes even a 1% chance of flooding is considered high risk because it amounts to a 1-in-4 chance of flooding over the life of a 30-year mortgage.
Who doesn't have flood insurance
Homeowners in high-risk areas who should have it sometimes decide not to get it. Someone who pays off their mortgage can drop their flood insurance once it鈥檚 not required. Or if they purchase a house or mobile home with cash, they may not opt for it at all.
The rest of us are just rolling the dice, even though experts have long warned that flooding can happen just about anywhere because flood damage isn鈥檛 just water surging and seeping into the land 鈥� it鈥檚 also water from banks, as well as mudflow and torrential rains.
Mark Friedlander, spokesman for the Insurance Information Institute, an industry group, said only about 6% of U.S. households have a flood policy 鈥� primarily in the coastal areas prone to hurricanes. That rate has remained steady in recent years despite the increasing frequency of severe flooding events, including in areas that are not formally considered by the government to be high risk.
鈥淟ack of flood coverage is the largest insurance gap across the country,鈥� Friedlander said in an email. 鈥淣inety percent of U.S. natural disasters involve flooding and flooding can occur just about anywhere it rains.鈥�
What flood insurance covers
Even if a homeowner does have flood insurance, the coverage may not be enough to make a policyholder whole again.
FEMA鈥檚 National Flood Insurance Program only covers up to $250,000 for single-family homes and $100,000 for contents. Renters can get up to $100,000 for contents, and commercial flood insurance will cover up to $500,000.
There are concerns that such flooding coverage limits are not robust enough, especially at a time when climate change is making strong hurricanes even stronger and making storms in general wetter, slower and more prone to intensifying rapidly.
And what typically happens to the people without flood insurance in a major storm is that they can try to recover some money from their standard home insurance but may end up in a fight to determine what damage is or isn鈥檛 wind versus rain, or even 鈥渨ind-driven rain.鈥�
Don Hornstein, an insurance law expert at the University of North Carolina, said the line between wind and water is a thin but very clear line that technical experts can determine. Should there be a proverbial tie, the law favors the insurance company.
鈥淚f the house was simultaneously destroyed by flood and, concurrently (by) wind, it鈥檚 not covered by private insurance,鈥� Hornstein said.
Sally Ho (), The Associated Press
