Idea of a 100-year floodplain may be misleading, Kin Insurance expert says

By Robert Hadley | | Jun 26, 2018

The National Flood Insurance Program has paid out more than $8 billion in flood claims associated with hurricanes, but estimates have pegged total flood damage in the tens of billions of dollars.   File photo

It’s easy to see the devastation wrought by the hurricanes and floods that have hit portions of the U.S. in recent years, but unless you’ve lived through one, the dollar amount of damage remains a mystery.

For those outside the disaster-stricken areas, the Federal Emergency Management Association can put it into concrete terms: for every inch of standing water one of Mother Nature’s furies leaves in a home, the price tag is $23,635 to repair the dwelling alone, according to Anthony Tornatore, director of insurance product management for Kin Insurance Inc.

And that doesn’t include the cost of replacing furnishings and priceless keepsakes.

“The National Flood Insurance Program (NFIP) has paid out more than $8 billion in flood claims associated with hurricanes, but estimates have pegged total flood damage conservatively in the tens of billions of dollars,” Tornatore told the Apopka Times via an email interview.

Sometimes, homeowners who haven’t read the fine print of their standard insurance policies face sticker shock once a catastrophe hits. The sad truth of the matter is that many coastal areas don’t offer flood insurance and many homeowners don’t buy it.

“There’s a widespread misconception that you only need flood insurance if your home is located in a floodplain,” Tornatore said. “Some homeowners think their standard … policy can address flood damage when it can’t.”

Even the safety net of the NFIP will only cover a portion of the damage, so Tornatore warns that it often isn’t enough to completely cover rebuilding or repairing a flooded property.

According to a news report posted on the Cape Coral Fox affiliate’s website, a study has shown that Floridians are now facing a higher risk of being affected by a major flood.

“We just haven’t done a good job of managing rivers in a holistic way,” Kris Johnson of the nonprofit Nature Conservancy is quoted in the station’s report as saying.

But the so-called “100-year floodplain” may be an idea that causes more harm than good. Drawn from geological survey data, it helps predict flood risk and establish building codes, but that’s where its value stops short.

“While the 100-year floodplain map is a starting point for looking at flood risk, it shouldn’t be the only consideration,” Tornatore pointed out. “It’s never been a precise measurement and it doesn’t account for human impact like urban development. “

However, public perception may be that with a 100-year flood, which Tornatore said has only a 1 percent chance of occurring in any year, homeowners may downplay the risk or ignore it if they are outside the high-risk area.

“Which explains why nearly 20 percent of flood-loss claims come from homes outside flood zones,” Tornatore said. “For example, most of the homes destroyed by Hurricane Harvey in Texas were not in the designated floodplain.”

Given the sheer number of catastrophes that have hit the southern and eastern coasts of the U.S. in the last five years, federal assistance funds from FEMA or NFIP are already facing challenges.

Tornatore said more private insurers need to spread out the risk when catastrophic damage occurs. Some carriers are developing new flood-specific policies based on their own data analysis. Soon, such policies may reach the market, he predicted, and will require “regulatory and program reform.”

“As more catastrophic events occur, people are going to want to ensure coverage is in place,” Tornatore said. “This demand should gradually drive more participants into the private flood marketplace, and the re-evaluation of the NFIP to come up with a better, fairer program should also help.”

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