Floods, blizzards, and other extreme weather conditions highlight the need for preparation and insurance

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According to Kentucky’s Emergency Management Director Michael Dossett, this week’s flooding “is likely to be one that goes into the record books.”

Following days of rain that deposited four to seven inches across a large portion of the state and raised rivers to levels not seen in decades, at least 49 counties have declared disasters.

 

Dossett and Gov. Andy Beshear stated that the state has contacted FEMA to request federal assistance and that evaluations for both the flooding and the ice storm last week would be done the following week.

The floods have postponed damage evaluations for the ice storm.

 

Extreme weather incidents, such as these floods and last month’s winter storm, which left millions without power, nearly 15 million without access to water, and dozens of Texans dead, highlight the significance of resilience planning and the need for homeowners and businesses to have adequate insurance coverage.

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gap in flood protection

 

Flooding is a factor in almost 90% of all-natural disasters in the US.

Floods annually result in billions of dollars in losses owing to coastal and inland inundations brought on by storms, heavy rainfall, snowmelt, mudflows, and other disasters.

The FEMA estimates that a residence might sustain damages of up to $25,000 from just one inch of floodwater.

 

However, the picture includes more than just immediate economic losses.

There are significant human consequences, and it may take years for families, businesses, and communities to recover.

 

Flood damage is not covered by typical homeowners’ and renter’s insurance plans.

However, the National Flood Insurance Program (NFIP) and an increasing number of private insurers offer coverage.

 

Many people think they can’t afford flood insurance, that their homeowner’s insurance covers flood damage, and that they don’t need it if the bank financing their mortgage doesn’t mandate it.

 

There is a sizable protection gap as a result.

 

According to recent research by the charity First Street Foundation, the US is appallingly unprepared for destructive floods.

Compared to FEMA’s flood zone categorization, it found “approximately 1.7 times the number of properties as having substantial risk.”

 

This translates to 14.6 million properties nationwide that are “substantially at danger,” according to the research, “of which 5.9 million property owners are currently uninformed of or underestimating the risk they face.”

 

The unsustainable system at present

 

The NFIP’s debt to the US Treasury exceeds $20.5 billion, leaving $9.9 billion of the law’s $30.43 billion borrowing cap available.

The NFIP is responsible for paying the interest on this loan, which is serviced.

The current system cannot be maintained as flood losses mount without modifications.

 

In an effort to “more accurately assess the disaster response capabilities” of the states, the District of Columbia, and U.S. territories, FEMA proposed “substantially” revising the “estimated cost of assistance” factor in December. The agency uses this factor to evaluate governors’ requests for a federal disaster declaration.

Its Risk Rating 2.0 effort, slated for introduction in October, attempts to improve how precisely flood insurance prices reflect the individual flood risk of insured homes.

 

Or, to put it another way, the federal government will probably ask states, localities, and some policyholders to foot a larger portion of the bill for natural disaster recovery.

 

To bridge the flood protection gap, FEMA and other federal and state agencies are collaborating with the private sector. Complex challenges call for multifaceted solutions.

Insurance is now the most economical solution for households and companies to reduce their exposure to flood risk.

 

Where you are, it can flood if it can rain there.

During a Triple-I webinar last year, Daniel Kaniewski, managing director for public sector innovation at Marsh & McLennan and a former deputy administrator for resilience at FEMA, said: “Any property can flood.

Get flood insurance even if you live a long way from a floodplain.

Whether you are a homeowner, renter, or any other type of consumer, get flood insurance.

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