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What flood insurance does and does not cover

time09-07-2025

  • Business

What flood insurance does and does not cover

SEATTLE -- Though natural disasters cycle across seasons and regions in the U.S., it's often a shocking discovery for property owners how expansive and expensive flood and water damage can be when a major storm devastates their homes, businesses and communities. That's because oftentimes insurance doesn't cover what the policyholder thinks it does — or thinks it should. The disappointing surprise is that while the standard home insurance policy does cover fire and wind damage, even good property insurance typically doesn't cover things like flooding and earthquakes, which usually require a special and separate policy for each. Here are the things to know about flood insurance. Most people who have flood insurance are required to have it. Although many property owners have the option of purchasing flood insurance, it is mandated for government-backed mortgages that sit in areas that the Federal Emergency Management Agency deems highest risk. Many banks require it in high-risk zones, too. But most private insurance companies don't carry flood insurance, leaving the National Flood Insurance Program run by FEMA as the primary provider. Congress created the federal flood insurance program more than 50 years ago when many private insurers stopped offering policies in high-risk areas. FEMA's Flood Map Service Center has an online tool to check your area. FEMA notes even a 1% chance of flooding is considered high risk because it amounts to a 1-in-4 chance of flooding over the life of a 30-year mortgage. Homeowners in high-risk areas who should have it sometimes decide not to get it. Someone who pays off their mortgage can drop their flood insurance once it's not required. Or if they purchase a house or mobile home with cash, they may not opt for it at all. The rest of us are just rolling the dice, even though experts have long warned that flooding can happen just about anywhere because flood damage isn't just water surging and seeping into the land — it's also water from banks, as well as mudflow and torrential rains. Mark Friedlander, spokesman for the Insurance Information Institute, an industry group, said only about 6% of U.S. households have a flood policy — primarily in the costal areas prone to hurricanes. That rate has remained steady in recent years despite the increasing frequency of severe flooding events, including in areas that are not formally considered by the government to be high risk. 'Lack of flood coverage is the largest insurance gap across the country,' Friedlander said in an email. 'Ninety percent of U.S. natural disasters involve flooding and flooding can occur just about anywhere it rains.' Even if a homeowner does have flood insurance, the coverage may not be enough to make a policyholder whole again. FEMA's National Flood Insurance Program only covers up to $250,000 for single-family homes and $100,000 for contents. Renters can get up to $100,000 for contents, and commercial flood insurance will cover up to $500,000. There are concerns that such flooding coverage limits are not robust enough, especially at a time when climate change is making strong hurricanes even stronger and making storms in general wetter, slower and more prone to intensifying rapidly. And what typically happens to the people without flood insurance in a major storm is that they can try to recover some money from their standard home insurance but may end up in a fight to determine what damage is or isn't wind versus rain, or even 'wind-driven rain.' Don Hornstein, an insurance law expert at the University of North Carolina, said the line between wind and water is a thin but very clear line that technical experts can determine. Should there be a proverbial tie, the law favors the insurance company. 'If the house was simultaneously destroyed by flood and, concurrently (by) wind, it's not covered by private insurance,' Hornstein said.

What flood insurance does and does not cover
What flood insurance does and does not cover

The Hill

time09-07-2025

  • Business
  • The Hill

What flood insurance does and does not cover

SEATTLE (AP) — Though natural disasters cycle across seasons and regions in the U.S., it's often a shocking discovery for property owners how expansive and expensive flood and water damage can be when a major storm devastates their homes, businesses and communities. That's because oftentimes insurance doesn't cover what the policyholder thinks it does — or thinks it should. The disappointing surprise is that while the standard home insurance policy does cover fire and wind damage, even good property insurance typically doesn't cover things like flooding and earthquakes, which usually require a special and separate policy for each. Here are the things to know about flood insurance. Most people who have flood insurance are required to have it. Although many property owners have the option of purchasing flood insurance, it is mandated for government-backed mortgages that sit in areas that the Federal Emergency Management Agency deems highest risk. Many banks require it in high-risk zones, too. But most private insurance companies don't carry flood insurance, leaving the National Flood Insurance Program run by FEMA as the primary provider. Congress created the federal flood insurance program more than 50 years ago when many private insurers stopped offering policies in high-risk areas. FEMA's Flood Map Service Center has an online tool to check your area. FEMA notes even a 1% chance of flooding is considered high risk because it amounts to a 1-in-4 chance of flooding over the life of a 30-year mortgage. Homeowners in high-risk areas who should have it sometimes decide not to get it. Someone who pays off their mortgage can drop their flood insurance once it's not required. Or if they purchase a house or mobile home with cash, they may not opt for it at all. The rest of us are just rolling the dice, even though experts have long warned that flooding can happen just about anywhere because flood damage isn't just water surging and seeping into the land — it's also water from banks, as well as mudflow and torrential rains. Mark Friedlander, spokesman for the Insurance Information Institute, an industry group, said only about 6% of U.S. households have a flood policy — primarily in the costal areas prone to hurricanes. That rate has remained steady in recent years despite the increasing frequency of severe flooding events, including in areas that are not formally considered by the government to be high risk. 'Lack of flood coverage is the largest insurance gap across the country,' Friedlander said in an email. 'Ninety percent of U.S. natural disasters involve flooding and flooding can occur just about anywhere it rains.' Even if a homeowner does have flood insurance, the coverage may not be enough to make a policyholder whole again. FEMA's National Flood Insurance Program only covers up to $250,000 for single-family homes and $100,000 for contents. Renters can get up to $100,000 for contents, and commercial flood insurance will cover up to $500,000. There are concerns that such flooding coverage limits are not robust enough, especially at a time when climate change is making strong hurricanes even stronger and making storms in general wetter, slower and more prone to intensifying rapidly. And what typically happens to the people without flood insurance in a major storm is that they can try to recover some money from their standard home insurance but may end up in a fight to determine what damage is or isn't wind versus rain, or even 'wind-driven rain.' Don Hornstein, an insurance law expert at the University of North Carolina, said the line between wind and water is a thin but very clear line that technical experts can determine. Should there be a proverbial tie, the law favors the insurance company. 'If the house was simultaneously destroyed by flood and, concurrently (by) wind, it's not covered by private insurance,' Hornstein said.

What flood insurance does and does not cover
What flood insurance does and does not cover

Winnipeg Free Press

time09-07-2025

  • Business
  • Winnipeg Free Press

What flood insurance does and does not cover

SEATTLE (AP) — Though natural disasters cycle across seasons and regions in the U.S., it's often a shocking discovery for property owners how expansive and expensive flood and water damage can be when a major storm devastates their homes, businesses and communities. That's because oftentimes insurance doesn't cover what the policyholder thinks it does — or thinks it should. The disappointing surprise is that while the standard home insurance policy does cover fire and wind damage, even good property insurance typically doesn't cover things like flooding and earthquakes, which usually require a special and separate policy for each. Here are the things to know about flood insurance. Who has flood insurance Most people who have flood insurance are required to have it. Although many property owners have the option of purchasing flood insurance, it is mandated for government-backed mortgages that sit in areas that the Federal Emergency Management Agency deems highest risk. Many banks require it in high-risk zones, too. But most private insurance companies don't carry flood insurance, leaving the National Flood Insurance Program run by FEMA as the primary provider. Congress created the federal flood insurance program more than 50 years ago when many private insurers stopped offering policies in high-risk areas. FEMA's Flood Map Service Center has an online tool to check your area. FEMA notes even a 1% chance of flooding is considered high risk because it amounts to a 1-in-4 chance of flooding over the life of a 30-year mortgage. Who doesn't have flood insurance Homeowners in high-risk areas who should have it sometimes decide not to get it. Someone who pays off their mortgage can drop their flood insurance once it's not required. Or if they purchase a house or mobile home with cash, they may not opt for it at all. The rest of us are just rolling the dice, even though experts have long warned that flooding can happen just about anywhere because flood damage isn't just water surging and seeping into the land — it's also water from banks, as well as mudflow and torrential rains. Mark Friedlander, spokesman for the Insurance Information Institute, an industry group, said only about 6% of U.S. households have a flood policy — primarily in the costal areas prone to hurricanes. That rate has remained steady in recent years despite the increasing frequency of severe flooding events, including in areas that are not formally considered by the government to be high risk. 'Lack of flood coverage is the largest insurance gap across the country,' Friedlander said in an email. 'Ninety percent of U.S. natural disasters involve flooding and flooding can occur just about anywhere it rains.' What flood insurance covers Even if a homeowner does have flood insurance, the coverage may not be enough to make a policyholder whole again. Monday Mornings The latest local business news and a lookahead to the coming week. FEMA's National Flood Insurance Program only covers up to $250,000 for single-family homes and $100,000 for contents. Renters can get up to $100,000 for contents, and commercial flood insurance will cover up to $500,000. There are concerns that such flooding coverage limits are not robust enough, especially at a time when climate change is making strong hurricanes even stronger and making storms in general wetter, slower and more prone to intensifying rapidly. And what typically happens to the people without flood insurance in a major storm is that they can try to recover some money from their standard home insurance but may end up in a fight to determine what damage is or isn't wind versus rain, or even 'wind-driven rain.' Don Hornstein, an insurance law expert at the University of North Carolina, said the line between wind and water is a thin but very clear line that technical experts can determine. Should there be a proverbial tie, the law favors the insurance company. 'If the house was simultaneously destroyed by flood and, concurrently (by) wind, it's not covered by private insurance,' Hornstein said.

Survivors describe catastrophic Texas flooding, ask "how are we going to move forward?"
Survivors describe catastrophic Texas flooding, ask "how are we going to move forward?"

Yahoo

time09-07-2025

  • Climate
  • Yahoo

Survivors describe catastrophic Texas flooding, ask "how are we going to move forward?"

Authorities continued their rescue and recovery missions in Central Texas on Tuesday as the death toll from last week's catastrophic flooding surpassed 100 people. Meanwhile, insurance experts have expressed concern over the coverage gap across Texas as the state becomes more susceptible to severe flooding driven by climate change. CBS News Texas reporter Bo Evans has more and Mark Friedlander, senior director of media relations at the Insurance Information Institute, joins "The Daily Report" to discuss.

Texas Home Insurance Warning Issued
Texas Home Insurance Warning Issued

Newsweek

time12-06-2025

  • Climate
  • Newsweek

Texas Home Insurance Warning Issued

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. It is only a matter of time before the property insurance crisis that has already hit California and Florida reaches Texas, according to experts, as coverage is quickly becoming unaffordable or unavailable—or both—for homeowners in the state. A bad year for the Lone Star State—which could include wildfires, hail, flooding and hurricanes—could leave many Texas homeowners on their knees, especially if affordability issues have led to risk scaling back their coverage or going "bare" altogether. Texas Faces a Triple Threat In a recent report warning of the worsening of the conditions facing the home insurance sector in Texas, Cotality wrote that the state is facing a "triple-threat." While California is prone to deadly wildfires and Florida is vulnerable to devastating hurricanes, The Lone Star state is impacted by both extreme weather events—as well as several others. According to Cotality, a global property information and solutions provider, Texas was the hardest-hit state in the country by hail storms in 2024, with over 180,000 homes feeling the impact of hail stones larger than 2 inches. Then there are wildfires: according to Cotality, a total of $88.4 billion dollars of property in central and western Texas are at moderate or greater risk of wildfire. When it comes to hurricanes, over 4.7 million homes in the Lone Star State are at moderate or greater risk of hurricane wind damage, while more than 400,000 are at risk of storm surge damage. Homes are surrounded by floodwater after Hurricane Beryl swept through the area on July 08, 2024, in Surfside Beach, Texas. Homes are surrounded by floodwater after Hurricane Beryl swept through the area on July 08, 2024, in Surfside Beach, Texas."Texas faces more severe weather and climate perils than any other state. This includes hurricanes, tornadoes, hailstorms, derechos, floods, wildfires and ice storms," Mark Friedlander of the Insurance Information Institute told Newsweek. "In 2024, the Lone Star State experienced 20 billion-dollar severe weather and climate events in 2024, the most of any state. Since 1980, Texas has experienced more than 170 billion-dollar loss events, the highest volume in the U.S.," he said. "In 2024, Texas experienced 169 tornadoes and 878 major hail events, the most across the country in both categories." According to forecasts from the National Oceanic and Atmospheric Administration (NOAA), this year's hurricane season has a 60 percent chance of being above normal, with 13-19 projected storms, 6-10 hurricanes and 3-5 major hurricanes. "This prediction is based on a combination of record-high Atlantic Sea surface temperatures and a weakening El Niño, which typically reduces wind shear and can enable storms to strengthen," Steven Haynes, assistant professor of practice, finance and managerial economics at the University of Texas at Dallas, told Newsweek. "From my perspective, given the near-record high temperatures in the Gulf, it is likely that Texas will face a hurricane this season," he said. Double-Digit Premium Hikes and Shrinking Availability As natural disasters are made more frequent and more severe by climate change and the Texas population continues growing, more and more people are living in harm's way. For the state's property insurance sector, this is a challenging environment to navigate. As costs for carriers are climbing quickly, Texas homeowners have faced double-digit increases over the past few years, while several insurers halted coverage in the state last year. Premiums rose by nearly 19 percent in 2024, slightly less than the 21 percent hike reported in 2023. But still, the average annual cost of home insurance in Texas is currently $4,585—117 percent more than the national average of $2,110, according to NerdWallet. Texas has long been one of the most expensive states for homeowners' insurance, but the frequency of double-digit hikes has increased in recent years. According to Haynes, this is due to several factors that have brought up costs for insurers. "One major issue is the state's vulnerability to severe weather and natural disasters, as Texas experiences more billion-dollar disasters than any other state," he told Newsweek. "The frequency and costs associated with hailstorms, hurricanes, wildfires, and extreme heat events have significantly increased." Additionally, Haynes said, rising reconstruction costs present a challenge to insurers, with rebuilding expenses rising due to increased labor costs, higher material prices and supply chain disruptions. "These factors have led to greater claim costs. Not to mention, the higher federal interest rates are compounding the issue, as the increased borrowing costs affect all components of the supply chain," Haynes said. "Ultimately, these expenses are passed on to consumers, contributing to rising insurance premiums." Higher reinsurance costs—what insurers pay to insure themselves—have also played a role, as "reinsurers have raised their prices and tightened their terms after years of substantial global losses, and insurers, in turn, pass these costs down to policyholders," Haynes said. "A common scenario is that people get stuck in situations where they can't afford their insurance premiums, or they are reasonable in the beginning, and then increase past the point of being affordable," Howard Kunst, Cotality chief actuary, said in a recent report. Forsaking home insurance altogether, however, could leave homeowners in financial ruin should a natural disaster strike their property. Growing Uncertainty Around Government-Back Plans When the private insurance market becomes increasingly inaccessible, government-backed home insurance programs play a crucial role. But the Trump administration's recent budget cuts to the Federal Emergency Management Agency (FEMA) and NOAA have added uncertainty over how reliable these programs could be this year. "Government-backed home insurance programs, such as the Texas Windstorm Insurance Association (TWIA) and FEMA's National Flood Insurance Program (NFIP), are still available but are facing financial and structural challenges," Haynes said. While there is little evidence that federal budget cuts during the Trump administration have directly impacted the availability of these programs, some significant changes have occurred, the expert added. "One major shift is that the NFIP has moved towards risk-based pricing (known as Risk Rating 2.0), which has resulted in increased premiums for many policyholders in coastal areas," Haynes said. "At the state level, TWIA has experienced rising assessments and may restrict new business if storm-related losses continue to rise. These changes are primarily related to actuarial sustainability and the increase in claims due to climate-related events, rather than political budget decisions." Timothy Davidson, a professor at the School of Social Work at Tulane University, previously told Newsweek that "with FEMA in flux and response systems stretched extremely thin, individuals need to take preparedness into their own hands immediately." In a crisis, he said, "self-reliance and community coordination will matter more than ever, connect with your neighbors, church groups and so on. With the FEMA staffing cuts, limited ability for coordination and collaboration with historic FEMA partners, and the current general state of limbo with disaster is real potential for a Katrina level catastrophe or worse, and that is not an exaggeration," he added. "Don't count on aid coming. If it does, it will be very delayed and will likely be minimal at best. Prepare, prepare, prepare!" Haynes said that all Texas homeowners should review their insurance policies, update their coverage limits, and consider obtaining flood insurance, even in areas not typically regarded as flood zones. A Scary Prospect for the Lone Star State's Future According to Cotality, the growing threat of natural disasters striking Texas and the rising cost of home insurance could lead to more residents flocking out of the state—a move that, in turn, would "widen the insurance gap and leave homeowners, as well state governments and economies, facing the possibility of insolvency as these tropical storms rack up progressively larger bills." Rising costs are also exacerbating the housing affordability crisis in the state, which has seen home prices jump from under $250,000 in 2019 to over $348,000 in May 2025. Higher home insurance premiums, as well as higher property taxes, are wiping out the benefit of growing inventory in the state, which is putting downward pressure on prices.

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