homeowners insurance

Hurricane Florence is a reminder of the limits of homeowners insurance.

Slow-moving Hurricane Florence’s hammering of North and South Carolina is a reminder of just what homeowners insurance does, and doesn’t do in a disaster. It’s also a prompt for others to make sure their homeowners insurance coverage is complete.

One of the main factors causing damage in the Carolinas was flooding from storm surge and torrential rainfall. Unfortunately, much of that damage may not be covered by standard homeowners insurance policies.

According to CNN:

Standard homeowners insurance policies cover wind damage, but they don’t cover damage from rain or floodwaters, such as storm surge or overflowing rivers.
Much of the damage from Florence will be caused by rainfall. The slow-moving tropical storm, which was downgraded from a Category 1 hurricane Friday, could bring flooding far beyond the North and South Carolina coastlines.
But most homes in the Carolinas don’t have federal flood insurance coverage, which is offered by FEMA. Of the 7 million homes in the two states, only about 340,000, or 5%, are covered under the federal program.
The only homeowners required to purchase the insurance are those who live in federally declared flood zones and have federally guaranteed mortgages.
The reason most homeowners insurance policies don’t include flood insurance is damage from flooding can be so widespread that it can wipe out an insurer, according to USA Today.
The paper reports:

If flooding damages your house but you don’t have flood insurance, be prepared to pay for most of the losses yourself. The Federal Emergency Management Agency does offer small disaster grants that average $5,000 per household, far less than the average flood insurance claim of $30,000. Still, it’s not nothing.

The Small Business Administration also provides homeowners and renters low-interest disaster loans that can be used to repair or replace houses and damaged property in disaster-declared areas. But these must be paid back eventually.

That’s why it’s important for homeowners and renters to assess their risk and consider adequate coverage. Flood insurance is not just for those in high-risk zones, either. One in five claims that the NFIP pays out goes to those who live in low- to moderate-risk flood zones.