The photos are horrifying—whole neighborhoods underwater, roofs blown away and thousands of cars submerged. Thank goodness we live in sunny Arizona and not Houston, Florida, or other hurricane-prone areas. But if you think floods are only a hazard in low-lying coastal areas, consider these statistics:
• Ninety percent of all natural disasters involve flooding.
• In the past 5 years, floods have occurred in all 50 states.
• More than 20% of NFIP (National Flood Insurance Program) claims are paid out to properties considered to have a moderate or low risk of flooding.
• The average flood insurance claim is approximately $42,000.
Are you at risk?
Floods can and often do occur in unlikely places. Here in Arizona, our desert terrain is often too dry to absorb heavy rainfall, and our drainage systems are sometimes unable to cope. Even mountainside homes are at risk as water can be channeled in unexpected ways.
According to a 2016 poll by the Insurance Information Institute, only 12% of U.S. homeowners have a flood insurance policy, and many of those may provide inadequate coverage. The majority of all flood insurance policies are backed by the National Flood Insurance Program (NFIP), a Federal program created by Congress in 1968. Mortgaged properties in high-risk areas are required to have flood insurance, but for other property owners coverage is optional.
The cost of even moderate flooding can be staggering. A mere 2 inches of water would result in more than $20,000 of damage to the average size home. Under the standard NFIP policy, the maximum coverage is $250,000 for homes, and $500,000 for non-residential buildings. Personally property coverage cannot exceed $100,000. For many homeowners and most businesses, these totals would fall far short of what it would cost to repair or replace their structures and belongings.
Businesses can be especially vulnerable to losses from floods. In addition to property damage, risks also include loss of inventory, company vehicles, and specialized machinery. What happens if your company has to shutter for several days, weeks, or months? What if a catastrophe causes unforeseen changes to your customer base? The effects can linger long beyond the time it takes to clean up the damage.
How much will it cost?
Like most insurance products, there is no “one-size-fits-all” policy for flood insurance. Coverages and deductibles vary, and there is typically a 30-day wait period between the purchase date of the policy and when it goes into effect. A reputable insurance agent will take the time to assess your unique needs and find a solution that adequately protects your risks. As an independent agency, General Southwest offers our clients multiple flood insurance options for personal property and businesses.
Would your current policy cover your losses after a flood?
If you aren’t sure, set up a consultation with a General Southwest insurance adviser. We can take a look at your current coverage and find a solution that protects your risks.
by Lisa Binsfeld