When Irene hit the East Coast over the weekend, flood damage was greater than wind damage in most regions. Inland areas were among those hardest hit by rains that produced flash floods.
Yet many homeowners will be stuck paying all repair costs out-of-pocket, after claims adjusters conclude upon inspection that flooding was to blame, and therefore damages aren’t covered.
That experience could cause many to reconsider whether to buy a separate flood insurance policy in time for the next storm.
“Nothing sells flood insurance like a flood,’’ said Robert Hartwig, president of the industry’s Insurance Information Institute. “It’s always the case that we see a surge in flood insurance sales in the wake of a flood.’’
A poll this year by the Institute found that just 14 percent of homeowners had a flood insurance policy. The lowest coverage was in a region hit by Irene: the Northeast, with 5 percent. The highest coverage rate was in the South, with 19 percent.
Coverage remains low despite court cases consistently upholding the industry’s denial of homeowners insurance claims involving damage from flooding, rather than wind, Hartwig said. A series of lawsuits followed in the wake of Hurricane Katrina, which hit the Gulf Coast in 2005.
Nearly all flood coverage is purchased through the government’s National Flood Insurance Program. Homeowners, renters and business owners in about 21,000 communities nationwide are eligible to purchase federally backed flood policies, typically through private insurers that market the coverage. Information is available at www.FloodSmart.gov.
The average flood policy costs around $600 a year, but can start around $129 in low-risk areas, according to the Federal Emergency Management Agency, which administers the insurance program. The average paid claim over the last five years was nearly $34,000.
