Florence to Cause Misery for Homeowners Without Flood Insurance

NC Flood Damage Florence

The non-stop rains and massive flooding that was caused by Hurricane Florence is expected to take a major financial toll on homeowners that live in North Carolina and surrounding states due to the lack of flood insurance. Only a small percentage of homeowners in the area were carrying flood insurance that would help offset the cost of rebuilding or repairing their homes that were damaged by storm surge or flooding rivers.

Standard homeowners insurance will not cover damage that is caused by flooding. Data shows that only 10 to 20 percent of homeowners in the coastal eastern part of North Carolina that were hit hard by flooding have a flood insurance policy through the National Flood Insurance Program (NFIP) which is the government backed flood insurance program.

The numbers are even worse for inland homeowners with only 1 to 3 percent of homeowners carrying flood insurance. Across the state of North Carolina only 3 percent are covered by flood insurance, that number is 8 percent in South Carolina.

Florence Brought Tons of Rain

The big damage from Florence ended up coming from flooding. In some areas it dumped 30 to 40 inches of rain in a very short period of time, leaving millions of home open to flooding.

The damage is estimated between $17 billion and $22 billion but that figure could easily go up over the next few months. Unfortunately, for many homeowners their insurance policy is not going to cover some of the most extensive damage to their homes because it was caused by flooding. A standard homeowners policy will not cover flood damage, leaving homeowners on the hook for the cost to repair or rebuild their home.

The reason many homeowners decided to forgo a flood policy is because their home may not have fallen into a high-risk zone designated by the government so they feel there is zero chance of their home flooding but that is just not true. In severe situations such as Florence even inland homes can flood significantly. In other situations, homeowners may not understand that their homeowners policy doesn’t cover flood damage.

Uncovered Homeowners Will Feel the Pain

The estimated insured losses caused by Florence are ranging between $3 billion and $5 billion but experts claim it could end up being as high as $10 to $20 billion. The major issue for homeowners is that insured losses are usually only about a third of total economic losses. This makes them financially responsible for a bigger portion of the repair and rebuilding costs if their loss is due to flooding and they are not carrying flood insurance.

In order to be fully protected a homeowner needs to have a separate flood insurance policy in place. While flood insurance is available in the private market, many homeowners opt for a NFIP policy. These policies carry limits of $250,000 for the structure of the home and $100,000 for personal possessions. If your home is worth more than that it is necessary to supplement your coverage in the private market.

Prices can vary dramatically but on average a NFIP policy runs about $600 t0 $700 a year. Coastal property premiums can easily run into the thousands of dollars. Homeowners who are not covered by a flood insurance policy can seek a grant or loan from the federal government or Small Business Administration.

Flood damage tends to be expensive. One inch of water in an 1,000 square foot home can cause $11,000 worth of damage. If you end up with a foot of water in your home the costs can quickly spiral out of control. This means that many homeowners affected by Florence will be on the hook for some very big repair bills.