The National Flood Insurance Program, or NFIP, was already in deep debt, to the tune of $24.6 billion, before Hurricanes Harvey, Irma, and Maria, and Tropical Storm Nate hit our shores. Further complicating matters, the Congressional Budget Office, or CBO, is projecting a budgetary shortfall of $1.4 billion. Let’s examine what’s causing the budgetary shortfall and what the future implications are for the flood insurance program.
Many people refer to a major water leak as flooding. Insurance, however, defines flooding, or a flood as rising water caused by rivers, lakes & streams overflowing their banks, rising water from heavy rains, or tidal surge which enters the home. This type of water damage isn’t covered by your home insurance policy, it’s only covered by flood insurance.
The Dallas / Fort Worth area recorded the wettest May on record with 16.97 inches of rain. We also survived the second wettest spring on record with 25.04 inches of rain from March through May. According to the National Weather Service, parts of D/FW have received between 16 and 24 inches over the past 180 days.
I’ve started receiving letters from the National Flood Insurance Program, or NFIP, for my residential clients with flood insurance policies on their homes. These letters are being sent to all flood insurance policy holders prior to their renewal as a result of the Homeowner Flood Insurance Affordability Act, or HFIAA, of 2014. The letter notifies flood insurance policyholders of a surcharge which will be added to their upcoming renewal.
The people affected by the recent Colorado floods have begun the process of rebuilding their lives as the water recedes from their homes, farms, and businesses. Many were stunned to learn their losses aren’t covered by their home owner’s policy and are wrestling with the financial implications of that news. Most people don’t know that no home insurance policy cover’s flood damage, only a flood policy does that.
The rain started falling in Colorado on Wednesday, September 11th. It rained, and rained, and continued to rain over the next several days. The rain on the 12th was particularly heavy when 4 to 6 inches of rain fell in less than a 12 hour period. In some places over 15 inches of rain fell during the multi-day storm. The creeks and streams rose and rivers overflowed their banks. According to the Colorado Division of Water Resources, water in many of the rivers and creeks had flows of over 1,000% than normal levels at the height of the flooding.
Colorado Springs and Manitou Springs, Colorado have experienced severe fires both last year and this year. In June of 2012, the Waldo Canyon fire ravaged almost 19,000 acres, killed two people, and destroyed 347 homes. The Black Forest fire that happened in June of this year torched over 14,200 acres, killed two people and destroyed 509 homes.
?Last Monday’s blog post was, “An introduction to flood insurance.” If you missed it, here’s the link for it http://50.87.248.161/~wiseinsu/an-introduction-to-flood-insurance/. It provides a good foundation of flood insurance. I thought I’d share some interesting tidbits of information I learned in writing that post as I always learn something in every blog I write!
There are a number of perils, types of things that can happen to your home, that aren’t covered by your home policy. The same is true for renters, condo and town home policies. One of those perils is flood. Hurricane Sandy, and even Irene from 2011 are great reminders that flooding happens. Damage to your home and even your personal property or contents is not covered if it’s lost or damaged by a flood.
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