Keeping Your Head Above Flood Waters

by Mark Goldwich

You may have noticed storm season is picking up. On the news you may see stories of tornadoes and hailstorms, because these tend to be large, violent, and spectacular events. But the same storm systems that create conditions for twisters and hail, can also  bring major amounts of rain. And with this rain comes localized flooding. Often, stories of flooding go unreported because they are so localized, sometimes affecting just part of one county, or a neighborhood, or even just one street. Needless to say, if it's your street, this is a big deal as far as you are concerned. And I know what some of you are thinking, “That’s never been a problem in my neighborhood.” Keep in mind, it was never a problem in their neighborhood either, right up until the moment it happened.

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So let’s just imagine for a moment that floods can happen pretty much anywhere (because they can), and with very little notice (because they do). What should be considered when thinking about floods?  How can we protect ourselves? More importantly, how do we prepare for something that can happen without notice? Even for seasoned insurance adjusters, flood claims are some of the most difficult claims to handle. The flood policies are written differently than standard homeowners policies. They are more strict in their coverage. Often they have lower limits. They don’t pay for you to live somewhere else while your home is being repaired, and they are not intended to “make you whole” as standard policies attempt to do. They are merely there to help bear the brunt of a flood loss. These flood policies are not written by your insurance company. Instead they are put out by the federal government, through the Nation Flood Insurance Program, which is part of FEMA. So, you can think of these policies as being more like social security – nothing more than a safety net to save you from ruin, .

But that's not to say flood insurance is a bad thing. When floods devastate a region, invariably there
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are large numbers of people who don’t have flood insurance. Why? Simply because it's not required as standard homeowners insurance is (if you have a mortgage). And you will always see some homeowners who do have flood insurance right next to those that don’t. The ones that have flood insurance will almost always fair better than those that don’t, especially when it comes to worrying how they will recover from the disaster. Those without flood insurance are typically ruined. They lose nearly all their possessions, they can’t afford to repair their homes, and they must depend on family, charity, or government to get by at all. On the other hand, those who do have flood insurance can get most of their belongings replaced, most of the repairs done on their homes, and they may only need temporary assistance, or may only dip into savings, or have to take out a small loan.

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The point is, the first step to surviving a disaster like flood, is to be prepared to begin with. That does two important things right away: It helps shift some financial risk from you to someone else who can better afford it (which is the purpose of insurance), and it can give you some peace of mind. Besides the fact that flood insurance is not required, even if you have a mortgage, many people still do not get flood insurance for one simple reason – they don’t live in a flood zone. If I had a dollar for everyone that has been devastated by flooding that didn’t think would ever happen because they were not in a flood zone…let’s just say I’d be very well off. And then, when they find out how inexpensive flood insurance can be when you are “not in a flood zone”, they get even more depressed.

Besides, just think about these “flood zones.” We toss the phrase around a lot, but do we really know what it means? How are flood zones created? By whom? And do they ever change? Well, flood zones are created by government officials, mainly using computer models and past experience, and yes, they can change over time – usually right after your home floods for the first time. For years, I have been saying, “If you trust the government to accurately draw your flood zones now, you might be standing in a long line and depending on the government to help you later.”

So please consider buying flood insurance – no, I don’t sell flood insurance, so that is not my motivation for being a proponent of flood insurance. It’s not even because my business can generate revenue on flood victims only if they have insurance. Instead, it’s simply because I have seen far too many people who didn’t have flood insurance when they needed it. If you have ever been to an area that has been ravaged by flood, it is something you will never forget.

When it comes to flooding in a non-flood zone, the risk may not be great, but then neither is the cost. If it never happens, you’ll have had peace of mind at a reasonable price. If it does happen, you can look like the smart guy on the block. So shift the financial burden, and be in a position to rebuild your life.

And while you're planning to survive disaster, you might as well do it right. Create a written disaster
plan (the internet is full of checklists and plans). Buy and stock emergency supplies in a disaster kit. Make sure the whole family is aware of the plan by reviewing it every year. Have one of more places to meet up if the family is not together when disaster strikes. Think about how you will communicate if phone lines or cellphone towers are down. Take photos or videos of your property – the building and the contents, and keep a copy in another location. Have a plan for your business as well. A major component of surviving disaster is the preparation that takes place before  disaster strikes. The better prepared you are, the better you will do during and after the disaster.

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.