Earlier this month the Pacific Northwest was hit with several days of drenching rains, causing mudslides and flooding across much of Oregon and Washington State that knocked out power to thousands and killed two people.
Sinkholes opened up on major roadways, rivers swelled over their banks and standing water shut down businesses and government services across the region.
Even in the rainy Northwest, this month’s storms were historic. Portland saw more than five inches of rain over the course of just three days, which is nearly as much as the city typically gets in the entire month of December. It took Seattle just eight days to surpass its normal December rainfall totals. Oregon Governor Kate Brown declared a state of emergency this week, saying that “heavy rains and wind have required the evacuation of residences, and mudslides and high water have severely damaged or blocked major roadways in … the state.”
Property damage is expected to be widespread, but the storms can also serve as a reminder of the damage that floodwaters can do. Flooding is the most common and most costly type of natural disaster in the U.S., accounting for 90% of all natural disasters and inflicting roughly $50 billion in damage in the country every year.
And, for most homeowners, this damage is typically not covered by their insurance policy.
The good news—if you can call it that—is that residential structures are not alone in this. Renters and most commercial property policies also exclude flooding coverage too. So we’re all in this together.
But that’s not to say that we’re at the mercy of the weather—literally. There are options out there when it comes to flood insurance coverage, it just isn’t simply as straightforward as buying a standard policy for your house.
Flood insurance is a separate product: You have to go out and get a flood insurance policy, it isn’t included in your standard homeowners package. This is worth repeating as, according to research from the insurance industry, the majority of U.S. homeowners don’t understand the steps they need to take to buy coverage.
If you don’t currently have flood insurance, speak to your insurance agent to learn more about your options. It can usually be added as a rider to an existing homeowners policy, or as a standalone offering from a private insurer.
Flood insurance is part of a federal program: The National Flood Insurance Program (NFIP) is administered by FEMA and was set up in order to ensure that American home and property owners have access to flood coverage. Since flooding can be so expensive—and is so common—many private insurers are not able to finance this type of coverage on their own. The NFIP program acts as a backstop, funding coverage that a pool of private insurance companies write, taking over responsibility for any losses.
This doesn’t have much impact on individual homeowners, it just ensures that policies are available to them at reasonable rates and that the funding is there when they need it.
You’re probably at more risk than you think: According to the Insurance Information Institute, those living in high-risk areas face a 1% risk of a flood every year, and a 26% chance over the course of the typical 30-year mortgage. Even those that don’t live on a designated floodplain, but are near one, are at significant risk over the long term. If Superstorm Sandy taught us anything—causing massive flooding and widespread damage in New Jersey and New York, including New York City, in 2012—it’s that no area is immune to significant water damage.
Unfortunately for most of us, flooding isn’t a question of if, it’s a question of when.