So Far, So Good

The Midwest is recovering from what may be some of the worst flooding in recorded history, but Texas and the Oklahoma Panhandle are suffering from drought. After a wild and wooly winter and spring, Arkansas seems to have settled into a “normal” pattern for this time of year. Louisiana appears to be holding its own, weather-wise, as well. Hurricane season began June 1 and no tropical threats have arrived yet. So far, so good.

Of course, that could all turn around on a dime.

The flooding in the Midwest, though, has put the spotlight once again on the problem of flood insurance. That is, getting people to understand that it is not included in their homeowners policy and that many folks need to purchase it even if they are not located in a so-called “flood zone.”

As Chris Boggs points out in what could be described as a tutorial on flood insurance — Yes, You Are in a ‘Flood Zone’ on page 48 — being located outside of a National Flood Insurance special flood hazard area does not guarantee a property is safe from flood loss.

Despite the relatively affordable price and the yearly admonitions of insurers, insurance commissioners and the Federal Emergency Management Agency, the Insurance Information Institute in a survey of roughly 1,000 homeowners in the Midwest in May found that only 17 percent had flood insurance.

The annual premium for a homeowners NFIP policy starts at $119 per year for $20,000 of property coverage (without a basement) and $8,000 worth of contents, according to FEMA, and increases according to the level of flood risk, whether there is a basement and amount of coverage needed. The maximum coverage amount is $250,000 for the structure of the home and $100,000 for the contents of the home. Renters can pay as little as $39 per year for $8,000 in contents coverage. Flood insurance is available on a replacement cost basis for the structure of the home and on an actual cash value basis for personal property.

Meanwhile, Nationwide Mutual Insurance Co. is tossing around the idea of expanding its homeowner policies to include flood coverage (see page 12). The company believes such a plan would save taxpayer money by reducing costs for the NFIP and that it would also reduce the cost of litigating the types of wind versus water disputes that have been prevalent in the aftermath of Hurricanes Katrina and Rita in 2005.

Texas and western Oklahoma certainly need the rain, but nobody wants flooding of the epic proportions that the Midwest has been dealing with. Still, it would be good to know that more than 17 percent of properties in the South Central region had flood insurance in place if the skies decide to open up our way.

Topics Flood Homeowners