Underscore Need for Flood Insurance

III - Insurance Information Institute

Florida Press Office – Lynne McChristian,
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Only 17 percent of Americans have Flood Insurance Policy

TAMPA, July 14, 2008 — Record widespread flooding across the Midwest has once again highlighted the catastrophic damages that flooding can cause. Still, homeowners appear to be unconvinced that floods can happen in their locales. A new survey conducted for the Insurance Information Institute (I.I.I.) reveals that only 17 percent of homeowners in Southern states have a flood insurance policy. That is the same percentage of Americans nationwide who have purchased flood insurance, but it represents a three percent drop in the South over last year’s survey results.

Nationally, the proportion of Americans with a flood insurance policy rose slightly – from 14 percent in 2007 to 17 percent in 2008. In Southern states, 20 percent of homeowners had flood policies in 2007; now, it’s just 17 percent. These findings are consistent with National Flood Insurance Program (NFIP) data that shows more people in Gulf Coast states are not renewing flood policies.
“The results seem to indicate that two years without hurricane losses may have caused people to let their guard down. The percentage of people buying flood insurance is extremely low,” said Lynne McChristian, Florida representative for the I.I.I.

The survey also revealed that 39 percent of Southerners still think their homeowners policy covers damage from flooding during a hurricane, although losses due to flood damage have been excluded from coverage for decades.

According to the Federal Emergency Management Agency (FEMA), floods, including inland flooding, flash floods and seasonal storms, occur in every region of the United States.

The I.I.I. reminds you to consider the following facts about flood insurance:
    Standard homeowners and renters insurance does not cover flood damage. Flood damage is excluded under standard homeowners policies. Only a flood insurance policy, available to homeowners and renters through the federal government, will cover flood-related losses. However, flooding is covered under the comprehensive section of an auto insurance policy
    Flood insurance is easy to purchase. Federal flood insurance can be purchased directly from an insurance agent or a company representative, and is available to communities that participate in the National Flood Insurance Program. To find an agent or company servicing your area, visit FloodSmart.gov or call (888) 379-9531.
    Learn about your flood risk. The NFIP has an easy tool to show your flood risk. Visit the Your Flood Risk section of the NFIP’s FloodSmart Web site; in the lower left hand corner is a One Step Flood Risk Profile tool where you can enter your address to check your vulnerability to flooding.
    Flood insurance is affordable. The annual premium for a homeowners NFIP policy starts at $112 per year, according to FEMA, and increases according to the level of flood risk 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
    Excess flood insurance policies add an extra layer of coverage. Many private insurers have begun offering excess flood policies, which provide water damage protection to homeowners over and above the coverage limits offered by the NFIP policy.
    Without insurance, relief from floods primarily comes in the form of loans. If your community is declared a disaster area, no-interest or low-interest loans are usually made available by the federal government as part of the recovery effort. These loans are just that—loans—and must be paid back. Obtaining a flood insurance policy is the only way to protect you fully from the cost of flooding.

For more information on flood insurance, go to the I.I.I. Web site or the FloodSmart Web site.

For related audio, go to Survey Underscores Need for Flood Insurance

For a video about flood insurance, go to Flood Insurance for Your Home.

The I.I.I. is a nonprofit, communications organization supported by the insurance industry.

Insurance Information Institute
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