At almost any time of year, floods can cause tremendous damage for consumers and small businesses. Whether it’s a hurricane, severe rainstorms or even runoff from melting ice, flood risk can be a year-round problem for many, especially along the southern coast of Texas - prompting the need to discuss the advisability of flood coverage.
For example, approximately 16% of the coastal city of Corpus Christi lies within the Special Flood Hazard Area (SFHA) as designated by FEMA.1 This makes Corpus Christi highly susceptible to flooding, especially during extreme weather events such as tropical storms and hurricanes.
According to the Federal Emergency Management Agency (FEMA)2, flooding is the most common cause of natural disaster damage in the United States. FEMA estimates that up to 40 percent of small businesses that experience significant damage following a natural disaster won’t be able to reopen. And according to the National Flood Insurance Program3, just one inch of water can cause up to $25,000 in damage to homes.
Flood related damage is excluded from commercial and residential property insurance policies but is available as specific coverage from a variety of private insurers as well as the federal government’s National Flood Insurance Program. In some high-risk areas, flood insurance may be mandated by lenders or landlords.
Understanding the Coverage
Premium costs will vary according to the amount of desired coverage, previous flood activity in the area, your property’s age, proximity to a river, lake, or the coast among other factors. If your property is located outside a high-risk area, you may be eligible for lower premiums.
If you rent, your landlord’s flood policy will not cover damages to your personal belongings. It is best to purchase your own flood insurance policy to cover any personal damages.
Evaluating the Risk
One of the challenging aspects of evaluating whether flood insurance would benefit you is that floods are very difficult to predict. Although flood risk is based on location and a history of previous flooding, other factors include rainfall, river flows, and recent landscape changes due to building construction.
Flood insurance policies have a 30-day waiting period, designed to prevent property owners or homeowners from purchasing coverage based on rising waters or forecasts of severe weather.
Remember that hurricanes, tornadoes, floods, fire… disasters can happen to anyone. It’s important to have an extensive recovery plan in place. Don’t get caught unprepared!