How to handle flood damage after a hurricane if you're uninsured

Floods are the most common and costly natural disaster in the United States and cause millions of dollars in damage annually, according to the Federal Emergency Management Agency (FEMA).

Despite flood disaster losses becoming more likely in coastal areas as development increases, many people in such high-risk areas still don’t have flood insurance to protect their properties.

However, more than 20 percent of flood claims actually come from properties that lie outside of high-risk flood zones, according to FEMA.

With the recent devastation of Harvey and Irma came the revelation that people in Florida and Texas, particularly Houston, aren’t adequately covered against flood damage.

According to a 2016 poll from the Insurance Information Institute, 12 percent of American homeowners had a primary flood insurance policy, which was a slight drop from 14 percent in 2015.

“What we tend to see is ‘out of sight, out of mind',” said Lisa Lindsay, executive director with the Private Risk Management Association (PRMA).

“If we don’t have active hurricane flooding, even though there are a lot of flood events that occur with regularity, people don’t tend to think about purchasing insurance or doing something to help mitigate the chances of loss,” Lindsay said.

Florida has undergone a steep decline in flood insurance policies since 2012, even in areas more likely to flood due to potentially devastating storm surge, according to the Associated Press.

Though Florida property owners still make up the bulk of federal flood insurance policies in the United States, the AP found that the state’s overall flood insurance rate for homes in flood-prone areas is at only 41 percent.

A study also found that many Houston residents faced a similar situation after Harvey inundated the growing city with heavy rainfall in August.

Homes in the Houston area were found to have 9 percent less flood insurance coverage than compared to five years ago, according to the AP.

“In 2016, they re-drew all the flood maps for Houston,” said Sam Craven, owner of Houston-based Senna House Buyers.

“You pretty much have to go in and check when the maps are re-drawn to see if you wind up in a flood zone,” he said.

Part of the decline might be attributed to complacency after Tropical Storm Allison drenched Houston 16 years ago. Experts believe residents may have let their guards down after such a lengthy time period between flooding disasters.

A rise in cost, which is the most common reason for forgoing flood insurance, has also played a significant role.

“Flood insurance costs vary, starting around $35 per month and range up to $100 per month,” said Dan Green, founder of financial education website Growella.

“In a typical-sized home, one inch of floodwater can cause $20,000 of damage,” said Green. “Harvey brought 50 inches.”

Extensive flood damage can lead to financial ruin for the uninsured.

“Homeowners in Houston who lack flood insurance [will] face the high costs of home repair, and some may enter bankruptcy,” Green said.

Next steps after flood damage

It’s estimated that only 40 percent of the approximately $30 billion in damage inflicted by Harvey will be covered by insurance. Federal assistance may an option for those who lack coverage.

People can apply for disaster assistance if the president declares their state to be a major disaster area. Those in need of assistance can check online to see if their area has been declared for receiving individual assistance.

Federal help is only available for a person’s primary place of residence, not secondary homes.

“If you don’t have insurance and you’re an individual in the home you live in, you need to jump online with FEMA and apply for support,” Craven said.

Help from FEMA may include supplies, shelter and loans, Craven said.

“Even if you don’t think you qualify for a lot of the different things that are on the FEMA website, apply for everything,” he said.

FEMA can offer a maximum of $33,000 in grant money for household repairs. Grants through FEMA’s Individuals and Households Program can cover things like temporary housing, repairs, replacing belongings and disaster-related expenses, including medical help and child care.

Up to $200,000 in loans are available through the U.S. Small Business Administration (SBA).

Low-cost SBA loans can help with repairing or replacing a flood-damaged home, refinancing a mortgage if the uninsured can’t get credit elsewhere and replacing damaged belongings for both renters and homeowners.

Business ownership isn’t necessary to apply for SBA loans; however, those funds will need to be paid back eventually.

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