It will be weeks before damage estimates from Hurricane Harveyare finalized, but there is no doubt that insurers will see figures in the billions of dollars.
After Hurricane Katrina, the National Flood Insurance Program (NFIP), a federal program managed by the U.S. Federal Emergency Management Agency(FEMA), experienced more than $15 billion in losses in Louisiana and Mississippi.
While a homeowners insurance policy will cover a number of specific perils, a standard policy will not provide coverage for flood damage. It may provide some coverage for rain or wind, but flooding from overflowing rivers and streets will not be covered.
Flood coverage is usually purchased through an additional policy from either a private insurer or from the NFIP. The Consumer Federation of America (CFA) “believes that Hurricane Harvey could result in as many as 50,000 claims for wind damage by homeowners” and two to three times that number in flood claims according to a press release.
CFA also estimates that less than 20% of homeowners sustaining flood damage will have insurance protection, leaving many responsible for their flood-related losses.
According to FEMA, the average flood claim from 2008 to 2012 was $42,000. In 2012, the average flood insurance policy cost $650 per year. In 2014, average claims paid ranged from a low of $10,476 to a high of $42,275.
Flood loss claims averaging $24,698 in 2017
For the first five months of 2017, the average claim payment for a flood loss was $24,698. CoreLogic, a global property information and analytics firm, conducted an analysis that found 52% of commerical and residential properties in the Houston metro area are at a "high" or "moderate" risk of flooding.
For homeowners and renters impacted by Hurricane Harvey, it will be important to document the loss and file a claim with their insurer or the NFIP, if they have the appropriate coverage.