On May 7, Insurance Commissioner Jessica Altman joined state agencies and hurricane experts from the National Oceanic and Atmospheric Administration (NOAA) on an East Coast tour at Harrisburg International Airport to raise awareness of the impacts from tropical cyclone threats and the danger of being caught without a natural disaster preparedness plan.
Altman highlighted flood insurance options and the importance of shopping around in the increasingly competitive market.
Altman emphasized most standard homeowners’ and renters’ insurance policies do not cover flood damage.
While many mortgage lenders, including those making home loans backed by the federal government, require flood insurance for properties in what are known as Special Flood Hazard Areas (SFHAs), Altman urged homeowners outside of these areas to consider this additional coverage.
“In Pennsylvania, we see a lot of flooding outside of SFHAs every year, and hear stories from homeowners and renters who suffered significant losses that were not covered because they did not have flood insurance,” Altman said.
Approximately one in four flood insurance claims are paid on policies in low-to-moderate-risk areas.
One of the main factors the department wants consumers to understand, is it doesn’t take a major body of water, or even a major storm, to cause a flood.
Anything from a broken sewer line to a slow-moving rainstorm can cause flooding.
[Note: A 2017 report done by Penn State for the Center for Rural Pennsylvania found “very heavy precipitation” has increased by 71 percent over the last 54 years in the Northeast and Pennsylvania putting the 831,000 people living on floodplains in the state at even more risk of flooding.]
“There is also a misconception that federal disaster assistance will automatically cover damages to a home or business in the event of a natural disaster,” Altman said. “However, flooding is not always declared a federal disaster, and even when there is a disaster declaration, the federal government’s Individual Assistance Program pays a maximum of $33,000 per property owner, with the average payout for Hurricane Michael in 2018 being just $7,000.”
“Many may not understand how hurricanes affect Pennsylvania directly,” National Hurricane Center Director Ken Graham said. “It’s important to recognize and highlight the severe impact inland flooding and other hazards can cause to homes, businesses and properties.”
Obtaining flood insurance is the best way for homeowners to ensure their property will be protected if flooding does occur.
Flood insurance is available through private sector insurance, or the federal government-run National Flood Insurance Program (NFIP), which almost exclusively provided this coverage prior to changes implemented in Congress in 2014.
The number of private flood insurance policies increased from 5,200 in February of last year to 8,950 this February, a 72 percent increase.
Twenty Pennsylvania-licensed insurance companies now sell private flood insurance, in addition to 59 individual producers who sell this coverage through what is called the surplus lines market. Surplus lines insurance is sold through companies licensed outside of Pennsylvania.
However, the producers selling this coverage are licensed in Pennsylvania, and the Pennsylvania Insurance Department monitors the financial condition of the companies selling this coverage.
Forty-seven percent of private market flood policies are now sold through Pennsylvania-licensed companies, as compared to only 26 percent two years ago.
“NFIP policies and some private coverage have a 30-day waiting period following purchase before coverage begins,” Altman said. “While flooding happens throughout the year, hurricane season is around the corner, so I urge consumers to consider this coverage now.”
For more information on both the NFIP and private flood insurance, visit the Insurance Department’s Flood Insurance webpage.
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