Thanks to heavy rains in recent weeks, the Bay Area is no longer in a drought. The bad news is the rains have wreaked havoc, causing widespread flooding and landslides. Unfortunately, just a small portion of the damage is expected to be covered by insurance.
According to Moody's RMS, the leading global catastrophe risk modeling and solutions company, 90% of all natural disasters in the United States involve flooding, causing billions in economic losses each year, but only about 2% of California households have flood insurance. That number has steadily declined. As of August 2022, there were only 193,281 residential National Flood Insurance Program (NFIP) policies in place, a decline of around 5% from the previous year.
"Many homeowners don't realize that standard homeowners policies and most commercial property insurance policies do not cover damage from flooding," said Kyle Chuang, a Farmers Insurance agent and affiliated chair of the Silicon Valley Association of Realtors. "Without flood insurance, most residents must pay out of pocket to repair and replace damaged items. Federal assistance through FEMA is not always available and may not be enough."
Chuang indicated that private insurers do not have their own flood insurance products, but NFIP flood insurance may be purchased through Farmers Insurance and other partner private insurance carriers.
Here are some common myths and facts about flood insurance and the National Flood Insurance Program:
Myth: You can't buy flood insurance if you live in a high-risk flood area.
Fact: You can buy federal flood insurance no matter where you live as long your community participates in the National Flood Insurance Program (NFIP).
Myth: You can't buy flood insurance immediately before or during a flood.
Fact: You can purchase flood coverage at any time, but don't wait because policies typically take 30 days to go into effect. There are a few exceptions that reduce or eliminate the waiting period. Read about them at floodsmart.gov/flood-insurance-cost/terms
Myth: Not every flood zone has a flood risk.
Fact: If it can rain, it can flood. Flood insurance is needed and available in all flood zones.
Myth: Flood insurance is available only for homeowners.
Fact: Renters and business owners can get flood insurance too. Renters can get contents coverage to be able to replace belongings.
Myth: Only residents of high-risk flood zones need to insure their properties.
Fact: More than 40 percent of NFIP claims come from outside the high-risk areas. If you live in an area of minimal flooding, you may qualify for a low-cost Preferred Risk Policy.
Myth: Disaster assistance is the same as flood insurance.
Fact: Without flood insurance, most residents must pay out of pocket or take out loans to repair and replace damaged items. Federal assistance is not always available and is not enough to get you back to your pre-disaster condition.
Myth: Federal flood insurance can be purchased only directly through the NFIP.
Fact: The NFIP partners with more than 60 private insurance companies to sell and service flood insurance policies. If you don't have an insurance company or your insurance agent does not sell flood insurance, use the NFIP insurance provider locator to find a provider near you. Phone NFIP at 877-336-2627 or visit floodsmart.gov/
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.