For many of us we end another Hurricane Season with a sign of relief that our local area has missed another year of mother nature’s assault. Many of us are still sensitive from the pain we felt and the destruction we witnessed with our neighbors in Panama City being hit by Hurricane Michael in 2018. A few long-term locals even remember leaving everything behind during the evacuation and anxiously awaiting to see if their house survived Hurricane Andrew in 1992. With these storms being monitored and hyped more than ever it almost feels commonplace to watch an entire region be devastated without a blink of an eye or pull of a heart string. We move on to another year crossing our fingers that next year it won’t be us.
But with Hurricane Ian projecting to be the costliest hurricane to hit Florida in modern history, can we pause for a moment actually correct our course so that we don’t make some of the avoidable mistakes? The hurricane couldn’t be avoided but the insurance coverage carried could have been bolstered considerably.
As you can see in the picture, how you build a home really does matter. All around the home built in 2020 are the remnants of the much older building code. Not only did the elevation pay off with storm surge but the roof looks intact as well.
Florida learned back in 1992 with Hurricane Andrew the price for building average homes. Committed to building more resilient homes, the Florida Building Code evolved to include stronger roof-to-wall connections, better shutters and windows, and providing insurance discounts for additional water mitigation techniques. It’s good to see how these small upgrades make such an impactful difference.
Lesson #2 More than 80% of Flood Damage was Uninsured
According to CoreLogic between $8 to $18 billion of the estimated total losses (between $41 and $70 billion) are from flooding and storm surges that are not covered a normal Home Insurance Policy. Of these Flood Losses between $10 and $17 Billion were uninsured. Yes, that’s almost the exact same amount as the total losses. This means almost no one had flood insurance. Home Insurance usually covers wind damage and damage caused by water entering a home only if the structure was broken in some way by the storm/wind. “In the counties whose residents were told to evacuate, just 18.5 percent of homes have coverage through the National Flood Insurance This 18.5% is an average of something much scarier. Areas that were labeled as Flood Plains have compulsory Flood Insurance while those outside this area had a meager 9.5% Flood Insurance rate.
The Federal Government granted some funds to help cover some of the gap in coverage, but these funds are usually minimal and awarded to minorities and the very worst hit areas. After all the Insurance Claims and Federal Funds are dispersed 1 in 5 homes will still be struggling to rebuild.
Lesson #3 The love for Florida runs deeper than our pockets
The rest of the country cannot understand why we continue to live here when we casually expect to live through a natural disaster or few. Honestly, I would prefer for them t
o think we’re crazy or maybe they and everyone else in the country would join us on the beach, in shorts, in November. We are all painfully aware of the cost that it takes to live by the most beautiful beaches in the world. We pay higher home insurance premiums than the rest of the country, we track hurricanes when they’re still wee baby tropical storms, and if it weren’t for the absence of income tax, we might have reason to move. But only “Floridians” can see the magic of the beaches and nature around us. And only “Floridians” can see the majesty of the sea when a hurricane is coming. And maybe “Floridians” are the only ones who know that the clearest sunsets and sunrises happen after the worst storms.
As another Hurricane season winds down, let’s regroup and prepare financially for the next year.
As local insurance agents we love our community and don’t ever want it to be on the news because the residents were underinsured. Please don’t think we’re pushy or preachy when we recommend at least getting a quote for flood insurance. It’s our job to make sure you’re protected, and the only way your home can be while living this close to the ocean, is with Flood Insurance. Talk to your agent today or start a free quote online. There’s no harm in at least seeing what your rate would be.
This blog is intended for purpose of educating the public on insurance matters and broadening the view of the impact that insurance may have on your life. Views shared in this blog are purely the opinions of the writer and do not express the views of all the staff at Norton Insurance. Any mention of rates, discounts, or eligibility is left up to the Insurance Company and does not mean the reader may qualify or be eligible.
When Hurricane Ian hit Florida in late September, it caused extreme damage that left many homes uninhabitable. But now, in the wake of the storm, property owners impacted by Ian could face as much as $17 billion in losses that aren't covered by their homeowners insurance policies. And the reason largely boils down to not having the right insurance in place.
A world of destruction
Research firm CoreLogic estimates uninsured flood damage from Hurricane Ian at between $10 billion and $17 billion. That's roughly the same amount of insured flood losses related to the storm.
Why such a large cost figure in terms of uninsured damage? It's a matter of homeowners not having the right coverage.
But only about 13% of homes in Florida have flood insurance, per the Insurance Information Institute. And given the number of hurricanes that have hit the state in the past few decades, that's surprising. https://www.nasdaq.com/articles/hurricane-ian-could-cost-up-to-%2417-billion-in-uninsured-losses
It appears that, despite an increased occurrence of devastating flood events, a declining percentage of people nationwide have flood insurance policies. The number of policies maintained by the National Flood Insurance Program has declined by nearly 700,000 since 2008, according to data acquired from the federal agency.
“There are many factors that influence this drop in policyholders, including the economic impact of the pandemic, the housing market, affordability, or purchasing flood insurance from the private market,” David Maurstad, the senior executive of the National Flood Insurance Program, said in a statement.
Hurricane Ian’s Toll Is Severe. Lack of Insurance Will Make It Worse.
In Florida’s hardest-hit counties, fewer than 1 in 5 homes have flood insurance. That means communities will struggle to rebuild, experts warn.
In the counties whose residents were told to evacuate, just 18.5 percent of homes have coverage through the National Flood Insurance Program, according to Milliman, an actuarial firm that works with the program.
Within those counties, homes inside the government-designated floodplain, the area most exposed to flooding, 47.3 percent of homes have flood insurance, Milliman found. In areas outside the floodplain — many of which are still likely to have been damaged by rain or storm surge from Ian — only an estimated 9.4 percent of homes have flood coverage.
FEMA offers some limited emergency assistance to homeowners without insurance, such as paying for temporary housing in a hotel, motel or mobile home, or making basic repairs to make a house habitable.
But FEMA typically won’t pay to rebuild homes, as The New York Times reported in July. Aid is limited to less than $40,000 — a fraction of what it costs to rebuild.
Congress can decide to provide extra money for disaster survivors, usually by giving funding to the U.S. Department of Housing and Urban Development, which can then set up what it calls Disaster Recovery grants to states. States can then use that money to pay for rebuilding homes.
But Congress has no guidelines for determining which disasters merit that extra funding and whether it provides the funding depends as much on the political clout of a state’s congressional delegation as on the actual level of damage. Even when Congress makes extra money available, it often takes years before that funding reaches homeowners.
Disaster survivors who lack insurance, but who can’t wait years in the hope of aid, can apply for help from the Small Business Administration, another federal agency that plays a role in disaster recovery. The agency loans to renters, homeowners, businesses and nonprofit organizations. But those loans must be repaid — what amounts to a new mortgage, which can be challenging for disaster survivors.
The fallback option for storm victims is to look for help from charities. But as disasters multiply, and as the economy slows, those charities are being stretched thin, with no guarantee that they’ll be able to help all those who need them.
The number of homeowners with flood insurance fell after a recent decision at FEMA that changed how prices for flood insurance are determined, according to Steve Bowen, the chief science officer at Gallagher Re, a reinsurance broker.
Last fall, FEMA began setting the cost of flood insurance based on the specific risk facing each individual home. Before then, premiums were determined using more general information, such as whether a home was inside the floodplain.
The new pricing structure means that rates for high-risk homes now reflect something closer to the actual cost of the risk they face. FEMA made the change so that the insurance program would be more financially self-reliant, leaning less on taxpayer funding after big flood events.
The number of households nationwide covered by the insurance program has shrunk by more than 165,000 under the new pricing scheme, a reduction of just over 3 percent, FEMA data show.
In Florida alone, the number of homes with federal flood insurance has dropped by an average of more than 4,000 households a month since the new pricing began.