View this article online: https://www.insurancejournal.com/news/west/2009/09/30/104189.htm
Insurance brokers say private companies won’t sell flood insurance in Kent, Renton, Auburn and Tukwila where the Corps of Engineers says Green River flooding is likely this winter.
Federal insurance is still available but capped at $500,000 for a structure and $500,000 for contents. The Seattle Times reports that won’t cover many businesses in the valley where industries have grown.
Homeowner insurance is capped at $250,000 for a building and $250,000 for contents.
The number of flood insurance policies in the Green River Valley rose from 118 in the first half of last year to more than 1,000 in the first half of this year.
The corps says the weakened Howard Hanson Dam may be unable to hold back a heavy winter rain.
Seattle insurance broker Sam Alexander said Lloyd’s of London has asked about the Green River Valley.
“It was a relatively unprecedented situation,” Alexander said. “Insurance is about the risk of unforeseen events. But here was the Corps announcing that it pretty much intended to flood the valley.”
As publicity increased, underwriters backed away, and what policies remained had exclusions for actions taken by governments. Because flooding technically would be decided by the Army Corps, insurers canceled the policies and returned the premiums.
Manufacturers with expensive heavy equipment are especially vulnerable.
“For somebody like me, it means if there’s a bad flood, I’m out of business,” said Eric Scheider, president of Synergy Machine, which builds complex parts for aerospace and medical industries. “The only insurance I can get is federal insurance, which covers a half-million dollars, which is fine, except that I have $1.5 million just in equipment.”
Greg Larkin, with Larkin Precision, owns milling machines and giant metal grinders that weigh 90,000 pounds. Water could fry the electronics, rust internal parts and potentially render precision equipment unusable. And replacement costs on just one of his machines would run $750,000, he said. His best insurance, Larkin said, “is finding a way to keep the water out.”
Under the circumstances, federal flood insurance is a great deal, said John Graves, who manages the federal insurance program in the region. It is available to anyone, regardless of whether they are in a flood zone. Rates vary depending on risk, but the average national cost is about $650 a year.