The National Flood Insurance Program (NFIP), a government-sponsored insurance program, is scheduled to expire on Sept. 30. For many Americans, it is the only source of flood insurance, because private insurers avoid the high costs of insuring against floods.
Individuals who have a mortgage on a home and live on a flood plain are currently required to buy into the National Flood Insurance Program. Those who own their home have the option to purchase NFIP insurance.
“When you have a flood like we had in the Houston area, which is by all accounts a 500 year flood, all of the flood maps are drawn according to a 100 year flood program or flood occurrence that may happen,” said Loy Vickers, a public insurance adjuster who has helped policy holders after disasters including Hurricanes Andrew, Katrina, Rita, and Sandy. “Now you have four times the number you would normally have.”
NFIP is provided through local carriers such as State Farm and All State but is underwritten by the federal government. At the end of September, Congress may vote to approve funding for next year. The program is currently $24.6 billion in debt. Recent storms may lead to flood maps being redrawn to expand into areas affected by Harvey and Irma, causing more individuals to be required to sign up for the NFIP.
According to Vickers, a number of individuals in the Houston area discovered after Hurricane Harvey hit that flood insurance is not included as a part of the standard coverage in a homeowner’s policy and is actually a separate policy.
“They thought it was covered with their normal drawn policy,” Vickers said. “You’re going need two separate policies, one for your dwelling for normal insurance occurrences like wind, hail, fire, lightning, vandalism, and explosions. You have to have a separate policy for flooding just like you would for earthquakes, because both of those have been removed from the standard policies.”
Another problem evacuees faced was the flood plain. Many did not realize they lived within a flood plain and a number of available graphs at the time were inconsistent in outlining what was the flood plain boundary.
If NFIP expires, millions of individuals will be left with no ability to buy flood insurance. Currently 1.2 million people were affected by the flooding in the Houston area and that number is rising. Flooding is also affecting families in Louisiana, Florida, Georgia and Tennessee.
The volume of individuals affected by the storm will likely increase insurance rates along much of the South and Southeastern United States. Traditionally, insurance rates increase by zip code; however because of the wide area of damage incurred by both Harvey and Irma, Vickers believes rates are going to increase by county.
“In Texas we had around 30 counties affected and about 20 in Louisiana,” he said. “You’re going to see rates go up across the board just because of the sheer volume of claims they have to handle.”
Vickers advises police holders to go through their policy again and make certain they are covered. If they are not yet covered, they should consider getting coverage as soon as possible before another hurricane hits. Policies can take up to a month before becoming effective.
“Renew your policies and make sure you have adequate coverage for your houses today,” Vickers said. “If you wait until the last minute for these storms to come in, it’s too late. If your policy wasn’t purchased over 30 days ago, it wouldn’t apply anyways, so you need to look at your policies. We tell our clients to review their policies every two years.”
After a storm hits, Vickers said to avoid insurance company adjusters because they are working for the insurance company. Public policy adjusters, Vickers said, do not work for the insurance companies so they can work solely on the holder’s claim.
“We know how the game is played,” Vickers said.
Most states have state-wide public insurance adjuster organizations. Claim holders in Texas can go to the Texas Association of Public Insurance Adjusters, a stable of advocates for policy holders.