While Texas wasn’t hit by a major hurricane this year, parts of the state still experienced historic flooding, and many communities continue to recover from Hurricane Harvey.
Exacerbating this challenge is that millions of families and businesses are underinsured or uninsured for natural catastrophes, including flooding — not just in Texas, but across the United States. Ensuring proper coverage should be a top priority for both policymakers and insurers in order to better protect communities.
A troubling and widespread trend is that many property owners don’t realize that flood damage isn’t covered under their standard homeowners insurance policy. Without proper flood insurance, families and businesses are not able to protect themselves from the potential financial devastation that can be the result of hurricanes or inland flooding.
This was an especially pervasive problem in the aftermath of Hurricane Harvey, where close to 80 percent of Texas residents impacted by the storm were woefully unprepared and didn’t have flood insurance, according to CoreLogic.
This major gap in protection isn’t limited to the Lone Star State. The Federal Emergency Management Agency estimates that only one third of U.S. properties in the riskiest areas for flooding are insured, and one in every four small businesses will not re-open after a disaster.
Floods are the most common and costly natural disasters in the U.S. — where just 1-inch of water in a home or business can cause more than $25,000 in damage.
A few things must be done.
The first step is for Congress to reauthorize the National Flood Insurance Program, which is set to expire at the end of November. Passing a long-term bill with reforms that expand consumers’ flood insurance options will provide greater stability and reliability for consumers.
Additionally, insurers and policymakers also must continue to work together to bring more flood insurance options to the marketplace and educate consumers about the dangers of flooding.
Another major challenge is that homeowners living far from the coast, in regions outside the riskiest areas, are not adequately insured for flood damage. Insurers and policymakers need to put greater emphasis on educating inland consumers on their potential risks and explaining the needed insurance to reduce gaps in coverages.
All residents and businesses, near the coast or inland, should know that flood insurance, which must be purchased separately, takes 30 days to go into effect. As part of that education, policyholders should talk to their insurers now about coverage and ask questions to better understand what their policies entail. With the new year just six weeks away, now is the right time to include an insurance review as part of being financially prepared for 2019.
Flood insurance can be the difference between rebuilding homes, businesses, and communities — and total devastation. Insurers and policymakers must continue forging impactful partnerships and working together to better prepare and protect our nation from natural disasters and the threat of floods. Consumer education and strong private-public partnerships can help improve flood resiliency in Texas and throughout the United States.