Helene shows homeowners' risk of not having flood insurance

Hurricane Helene has shown Americans'low levels of flood insurance. Damage from the storm is being estimated at $25 to $30 billion, and most of it won't be covered by flood insurance. It has brought home once again the sobering but largely unknown fact that homeowners insurance does not cover damage from flooding.

Only about 4%of Americans have flood insurance, according to the Federal Emergency Management Agency (FEMA), with the majority of those policies issued under the governments National Flood Insurance Program.

Massive flooding across the South and into Appalachia occured not only in coastal areas but in inland towns not normally subject to massive floods, and not covered by flood insurance.

This will be one of the most significant weather events to happen in western portions of our area, a weather service spokesman in western North Carolina said in an Insurance Journal report.

This shortfall is caused by two main factors:

• Many people are unaware that regular home insurance usually does not cover floods, or that
• they live in a flood-risk area where this extra purchase would protect them.

Homeowners who live within FEMA-designated flood zones are required to buy flood insurance if they have a mortgage. However, FEMA has mapped onlyone-thirdof Americas floodplains, according to the Association of State Floodplain Managers.

Further, many FEMA maps don't consider flooding from rain water, only from storm surges and rising rivers. Many inland counties in the Southeast and Appalachia aren't covered and homeowners, therefore, aren't required to have flood insurance.

FEMA's coverage is out of date because of factors ranging from suburban sprawl bringing residents into previously sparsely populated areas and by climate change, which can contributeto heavier rainfall and more frequent storms.

There are also many residents who had flood insurance at one time but canceled it because of increasing premiums. Coupled with more expensive homeowners and auto policies, the cost of insurance simply exceeds many families' ability to pay.

Rising insurance costs

Homeowner insurance rates in the states in Helenes pathwent up by an average of more than 27% from 2018 to 2023, according to S&P Global Intelligence. The price hikes have also been steep for flood insurance. FEMA rolled out a new rate schedule in 2021, increasing coverage on many primary residences by 18%. Half of all policyholders will see their premiums more than double after five years, experts say.

Going without flood insurance is understandable but it's a big gamble. Flooding is responsible for two-thirds of the costs from all natural disasters, says Flood Defenders, a nonprofit flood insurance advocacy organization.

FEMA estimates that a single inch of floodwater in a home can cause $25,000 in damage.

Don't count on FEMA

Many homeowners mistakenly think FEMA will step in and help them if they don't have flood insurance, but this is not always the case. FEMA is running short of funds and can't cover everyone.

Having flood insurance may make you eligible for increased FEMA assistance, even if your policy doesn't cover all your losses. Also, flood insurance can help you start your repairs and recovery process sooner, as you won't have to wait for FEMA grants or SBA loans to be processed.

Federal aid basically comes in two forms:FEMA and Small Business Administration (SBA) loans.

• FEMA Individual Assistance: If your county has been declared a federal disaster area (which is likely if it was hit by Helene), you may be eligible for FEMA assistance. This can include:

• Temporary housing assistance: Help with lodging expenses if your home is uninhabitable.

• Essential home repairs: Grants for repairs to make your home safe, sanitary, and functional.

• Personal property replacement: Help replacing essential items like appliances and furniture damaged by the storm.

• Other needs assistance: Grants for things like medical expenses, childcare, and moving and storage.

• SBA Disaster Loans: The Small Business Administration (SBA) offers low-interest disaster loans to homeowners, renters, and businesses to cover uninsured losses. These loans can be used for:

• Home repair or replacement

• Personal property repair or replacement

• Economic injury to businesses