Flood insurance has long been a hot-button issue in Florida, but other states are getting into the act after Hurricane and Tropical Storm Irene, and Tropical Storm Lee, caused devastating floods in some northern, inland communities.
According to The Wall Street Journal, insurers including Chubb and Farmers have seen flood insurance inquiries rise by 30% or more, especially in Northeastern states. However, industry experts also told the Journal that standard flood coverage in the South doesn't necessarily translate to the needs of the Northeast. Total home insurance premiums could double with flood coverage added, according to the article:
The federal flood program will cover up to $250,000 to rebuild a home and $100,000 in contents. That may suffice in New Orleans, says Scott Simmonds, an insurance consultant in Saco, Maine, but it falls short in Boston or New York, where materials and labor costs are higher.
To have full coverage, then, homeowners in the Northeast could need at least three different insurance policies, Mr. Prible says: basic home insurance; additional flood insurance; and a third, supplemental flood policy that would cover damage to basements and cellars, and also offer higher limits.
Premiums for the federal flood program, meanwhile, could rise under a House bill supported by President Obama. The goal is to generate an additional $4.2 billion in premium revenue over 10 years, according to Reuters. The bill also encourages more private flood insurance coverage.
It's clear that homeowners (and renters, like me) don't want to be in the tenuous position of going without flood coverage — advice endorsed by Deloitte's Howard Mills in a conversation with me earlier this month. The real cost of flood coverage, however, could cause some sticker shock for consumers and government.
Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio