Floods, Fires, and the Insurance Homeowners Need but Don’t Get

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The heavy rains that pounded Southeastern Louisiana and the wildfires that have broken out through California over the past few days have taken a heavy toll in emotional and financial destruction.

In Louisiana, nearly a dozen people have died, coffins have floated down streets, and about 40,000 homes have been affected by the floods. Meanwhile, tens of thousands of California residents have been evacuated from their homes as the fires burn. Yet many of those affected aren’t covered by insurance for this type of natural devastation.

In fact, most home and business owners in the worst-hit, Gulf Coast communities don’t have flood insurance. Just 20% of Louisiana homes carried the insurance in July 2015, according to the Federal Emergency Management Agency.

In the East Baton Rouge Parish, just one in eight of the roughly 192,436 households are covered by the policies, according to The Advocate. In nearby Livingston Parish, only 22%, or about one in five, of buildings carried coverage beyond what is provided by their homeowners insurance. And a measly 1% of property owners in St. Helena Parish and 12% in Tangipahoa Parish are insured against flooding.

FEMA declared those and 16 other parishes federal disasters. More may soon join the list. Homeowners in neighborhoods where flood insurance wasn’t required are now eligible for up to $33,000 in government grants.

As of Tuesday, about 40,000 people had applied for disaster assistance, according to Louisiana Gov. John Bel Edwards. But homeowners should expect to receive much less, Insurance Information Institute spokesman Michael Barry told The Advocate.

In past floods, Louisiana residents received an average $7,500, Edwards said at a Tuesday press conference.

This is the second time this year parts of the state, which still hasn’t entirely recovered from the effects of Hurricane Katrina a decade ago, have been underwater. Flooding due to heavy rains hit Louisiana and neighboring states in March.

Nationally, the No. 1 natural disaster is flooding—and the average flood insurance policy costs just $700 annually, according to the National Flood Insurance Program. However, that can be substantially higher in high-risk, coastal areas. And premiums are rising annually.

Mortgage lenders typically require homeowners in high-risk areas to buy flood insurance. But those who own their homes free and clear don’t have to purchase the policies. And many folks don’t realize that their regular homeowners insurance doesn’t include flood insurance.

“Flood insurance is getting so expensive,” says Toms River, NJ–based real estate broker George Kasimos, one of the founders of the group Stop FEMA Now. “So people will gamble.”

However, more homeowners living in areas with lower risks of flooding may want to look into the insurance as new swaths of the country become more storm-prone. The payouts from the flood insurance policies can keep homeowners with heavy losses afloat while they make repairs or rebuild.

“There’s definitely an increase in heavy rainfall due to climate change,” John Nielsen-Gammon, the state climatologist in Texas, told the New York Times. “Some places will see a dramatic change.”

It’s not just storms and flooding that can wreak havoc on homeowners. Wildfires have been breaking out in drought-prone California, consuming thousands of acres and forcing tens of thousands of residents from their homes.

On Tuesday, a blaze in the San Bernardino Mountains, the canyons east of Los Angeles, led to mandatory evacuations for more than 82,600 living in more than 34,500 homes, according to the Los Angeles Times. About 30,000 acres had burned as of Wednesday.

Two more fires to the north that started on Saturday have led California Gov. Jerry Brown to declare states of emergency in the affected areas. More than 175 buildings and 4,000 acres had been gobbled up by Monday in Lake County, about 100 miles north of San Francisco, according to the Times. Brown also declared a state of emergency for San Luis Obispo County, about an hour north of Los Angeles, where a wildfire had burned up 7,300 acres and consumed 40 buildings as of Wednesday.

We don’t know how many of those homeowners have adequate insurance coverage, but homeowners and renters in dry areas should make sure their insurance covers wildfires. They should also take simple steps to prevent blazes such as planting fire-resistant plants around their homes, keeping their properties free from combustible dry grass, branches, and other dead vegetation, and removing any tree branches directly over their homes. And they can keep butane and propane tanks far away from their homes and make sure their gutters are free of leaves, pine needles, and other dry plants.

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