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Home and Dry: Few Homeowners Have Adequate Flood Insurance

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Tuesday, 13 Feb 2018 12:57 PM Current | Bio | Archive

With winter fading into the rear view mirror, Northeastern states can now look forward to their next seasonal weather event: Spring rains and flooding.

As Pennsylvania, Massachusetts, New York, Maine and other New England states become warmer in the months to come, history suggests they will also get wetter. The coming rains, combined with the runoff from melting snow, may make for saturated groundwater levels and an increased risk of dangerous floods.

Many Northeastern states regularly experience spring floods, and it pays to prepare and protect yourself against the financial losses they may cause.

For example, in 2016, Pennsylvania and New York experienced rains that were heavy enough to cause evacuations and road closures due to flooding. And this year, floods in Massachusetts have already caused power cuts to thousands of residents.

For those who live and work in the Northeast, it’s wise to explore the risks of flood damage to property and its potential cost, in order to determine whether your insurance offers adequate protection.

Flood and Rain Risks

Not every rainstorm results in a damaging flood, of course, and not every flood will damage your home. However, when severe rains and subsequent flooding do occur, residents are often by surprise, despite the warnings. That’s especially true in the Northeast, because floods are common but typically cause only minimal damage. Those factors encourage a complacency that often results in heavy losses for homeowners and businesses.

In 2010, heavy rains and flooding across the Northeast caused $2.1 billion in damage, and set records along the way. At the time, the floods were described as the worst to hit the Northeast in 100 years. Commenting on the damage seen in Rhode Island, one councilman and business owner told NBC News, “I think we’re all done.” He and his family lost a 100-year-old auto restoration shop and more than 250 cars, all of which had been immersed in 10 feet of water. Around the area, more than 35 businesses had to be condemned due to the extent of the damage.

Therein lies one of the major risks of flooding: that you will lose virtually everything you own. And while people correctly perceive the considerable power of a bad home leak to cause the catastrophic loss of a home, many residents underestimate the potential for property loss outside the home, where cars, sheds, and other outdoor equipment and facilities are highly vulnerable during a storm. Recovering from flood damage alone can be costly, but when flood waters are fast moving, or take a long while to recede, many buildings may be marked as a total loss.

In other cases, the heavy rains that lead to flooding in some areas can cause unexpected damage. Leaking roofs, for example, can lead to thousands of dollars in damage to your home or business property. A leaking roof could be due to a handful of reasons, including old roof tiles, debris that’s backed up in the gutters, missing shingles, or a roof that’s over saturated. When heavy winds and rains come, your home may be spared water from the flood, but not from the leaking roof.

Protecting Your Property with Flood Insurance

Flood insurance is of particular importance as most homeowner’s insurance policies do not cover flood damage. Yes, fire damage is covered, but floods are rarely included as part of the covered perils. When Hurricane Harvey wreaked havoc in Texas last year, 80% of those affected lacked the proper flood insurance to cover the cost of the damages. Of the estimated $25 billion to $35 billion in damages from the storm, less than $9.5 billion was covered by flood insurance. Simply put, many people were “all done,” without the proper coverage to help them to recover.

In the Northeast, too, only a small percentage of residents are covered by flood insurance. According to data from the Federal Emergency Management Agency, the numbers are noticeably low. In Rhode Island, for example, where floods hit hard in 2010, fewer than 14,000 flood-insurance policies are in effect. In Pennsylvania, fewer than 60,000 policies have been written, and in New York, only about 181,000.

Thankfully, flood insurance covers a large proportion of the damage that results from water entering your home, from floods to roof leaks, so long as it isn’t associated with your home’s plumbing. Flood insurance will not, for example, cover water damage that results from a burst pipe during the winter. For that, you’ll need homeowners insurance or business property insurance coverage.

As with all insurance policies, if you do acquire flood insurance you will need to ensure that you regularly update the value of your assets with your insurance provider. In most cases, only the amount written into the policy is covered, even if you’ve acquired new items since you compiled it.

Finally, do not ignore the importance of flood insurance even if you live outside a common flood zone. It is often those who live just beyond flood zones who find themselves without recourse after a flood occurs. Flood insurance is available anywhere, regardless of whether you live in a flood zone, and it is less expensive outside those zones, sometimes dramatically so.

Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.

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For those who live and work in the Northeast, it’s wise to explore the risks of flood damage to property and its potential cost, in order to determine whether your insurance offers adequate protection.
flood, homeowners, northeast, insurance, rain, risks
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2018-57-13
Tuesday, 13 Feb 2018 12:57 PM
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