You Need Flood Insurance

Homes under water after Hurricane Harvey.

We talk a lot about flood insurance at I.I.I. for at least two good reasons:

  • It’s the most common and costly natural disaster in the United States, with billions of economic losses every year. According to the National Flood Insurance Program (NFIP), 90 percent of natural disasters in the U.S. involve flooding.
  • A 2016 I.I.I. survey found that 43 percent of US homeowners incorrectly think that heavy rain flooding is covered under their homeowners insurance – and only 12 percent had flood insurance.

Floods happen. Regularly. Even if you’re not in a flood zone – and even if you’re not usually in the path of a hurricane. If your home gets flooded, it will be a financial and emotional nightmare: FEMA argues that only 1 inch of water can cause $25,000 of damage to your home.

Your homeowners insurance won’t cover floods: If you don’t have flood insurance for your home, you probably aren’t covered under your homeowners or renters policies because flood risks used to be considered uninsurable.

To address this lack of coverage, the National Flood Insurance Program (NFIP) was created back in the 1960s. The NFIP is a federal program that provides flood insurance to participating communities. If your community participates in the program, you can often purchase insurance through a private insurer that handles policies and claims on behalf of the NFIP.

Private insurers have also recently begun offering flood insurance outside of the NFIP, as new modeling techniques have helped them get a better handle on the risks and costs.

Flood insurance will usually cover physical losses to your home caused by floods or flood-related events, like erosion – with some limitations (trees and fences aren’t covered, for example). You can also buy coverage for the contents inside your home, making flood insurance a crucial tool to help you get back on your feet.

Because disaster assistance won’t be enough: disaster assistance is often only available if you live in a declared disaster area. And even if you are, the FEMA disaster grant is only about $5,000 per household, a fraction of the average flood insurance claim of $30,000.

Flood insurance pays whether you’re in a declared disaster zone or not.

To learn more about how flood insurance works, see our resources here at I.I.I.:

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University of Pennsylvania Hackathon Recap

Brent Carris, Research Assistant at the Insurance Information Institute, files this report from the PennApps hackathon.

The Policy Incubator and the Insurance Information Institute (I.I.I) teamed up to sponsor a “hack-for-resilience” route at this year’s PennApps, the nation’s first student-run college hackathon which took place on September 7-9.

Presentations were given by: Howard Kunreuther, Carolyn Kousky, and Brett Lingle of the Risk Center at the Wharton School; and the I.I.I.’s Brent Carris. Presenters discussed innovative tech-driven, insurance and disaster-relief/preparedness solutions. Student interest exceeded expectations, with 44 teams entering the hack-for-resilience.

First place was awarded to a hack called Babble.  This team created a mesh network that can be used when Wi-Fi is down to facilitate post-disaster communications, coordinate help, triage assistance, and give better information to first responders. Second place was awarded to a hack called Eleos that would match disaster victims’ needs directly with those who have resources to help. Eleos along with many other hacks were created in response to recent events, such as the California wildfires, and inspired by students whose family and friends survived disasters. You can see all other entries and winners here.

The I.I.I. is proud to partner with universities across the country to recruit the next generation of insurance professionals. Stay tuned for next week’s post from Kansas State University’s career event.

 

 

Hurricane Dos and Don’ts

If you live in the projected path of Hurricane Florence, you should be prepping your home and finalizing your emergency and evacuation plans.  

Heavy rain and wind storm at a beach front condo property.

Here are some Dos and Don’ts to consider for prepping and riding out the storm.  

Don’t: 

  • Don’t go outside during the storm. This is a no-brainer. Even a category 1 hurricane can reach sustained winds of 74 mph. Category 5 winds are over 156 mph. Wind speeds like this can turn even small debris into deadly missiles. And don’t be fooled by the eye of the storm – there will be a period of calm before the hurricane force winds return from the opposite direction.
  • Don’t grill indoors. If your power goes out, don’t be tempted to throw some steaks onto a grill indoors. Charcoal or gas grills can release deadly levels of carbon monoxide.
  • Don’t drink non-bottled or untreated water. Flood waters are often filled with bacteria and other contaminants – including sewage. Don’t drink tap water – and don’t drink any water exposed to flood water, including bottled water. The FDA has tips on how to make your tap water safe to drink.
  • Don’t drink alcohol. I repeat: Don’t drink alcohol during a hurricane. You never know when you will need to evacuate at a moment’s notice or deal with a life-threatening emergency. You’re going to want all your wits about you while the hurricane is raging – lives could depend on it, yours included. That’s why some jurisdictions will ban alcohol sales prior to a hurricane.  

Do: 

  • Do stock up on lots of water. The CDC recommends at least 5 gallons of water per person. You may also want to buy iodine tablets to clean drinking water.  
  • Do make sure you have more to eat than chips and salsa. Or bread, for that matter – you’re going to want to have lots of non-perishables with nutritional value, especially canned foods. A minimum 3 to 5-day supply per person is recommended.
  • Do prepare your house properly. Clear your yard of furniture or anything else that could blow away. Cover your windows and doors using storm shutters or plywood – and stay away from windows and doors during the storm, if you can. Make sure your carbon dioxide detector has enough battery life to prevent CO poisoning. (Check out a longer list for house prep here. I.I.I. also recently gave some advice on preparing your home.)
  • Do be responsible and prepare for the worst. Make sure you have emergency and evacuation plans in place before the storm hits. Communicate these plans to everyone at your house. Find out where the nearest storm shelter is. Keep track of the storm. Have flashlights and extra batteries ready. Buy a first aid kit. Ready.gov has more advice here 

These are not exhaustive lists. Make sure to check governmental information for help on prepping for a hurricane. And be safe out there. Hurricanes are not a joke. 

Hurricane Florence – property losses and insurance implications

Approximately 758,657 homes in North Carolina, South Carolina and Virginia with a reconstruction cost value (RCV) of approximately $170.2 billion are at potential risk of storm surge damage from Hurricane Florence, according to a Corelogic® release.

As we continue to keep a close watch on Hurricane Florence, we’ve put together a list of our content to help understand the insurance implications of storm related property losses.

Hurricane Florence – Home preparedness tips

Hurricane Florence is expected to make landfall along the Southeast or Mid-Atlantic coast as a category 4 storm on September 13.

According to computer model forecasts, Florence will come ashore in Southeast North Carolina, although slight variations could alter the path of the storm that will affect areas of the nation that are far away from the location of its landfall.

A state of emergency has been declared in South Carolina, North Carolina and Virginia in order to mobilize resources to mitigate the effects of the storm. If you are in the path of the storm, plan your evacuation route ahead of time!

Below are just a few steps you can take to protect your home:

  • Cut weak branches and trees that could fall on your house and keep shrubbery trimmed.
  • Hurricane force winds can turn landscaping materials into missiles that can break windows and doors. Much of the property damage associated with hurricanes occurs after the windstorm, when rain enters structures through broken windows, doors, and openings in the roof.
  • If you don’t have storm shutters to protect your windows from breakage, fit plywood panels to your windows, which can be nailed to window frames when a storm approaches.
  • Make sure exterior doors are hurricane-proof and have at least three hinges and a dead bolt lock that is at least one-inch long.
  • Seal outside wall openings such as vents, outdoor electrical outlets, garden hose bibs and locations where cables or pipes go through the wall. Use a high quality urethane-based caulk to prevent water penetration.
  • If you live in a mobile home, make sure you know how to secure it against high winds and be sure to review your mobile home insurance policy.
  • If you have a boat on a trailer, know how to anchor the trailer to the ground or house—and review your boat insurance policy.
  • If you have a swimming pool, lower the water level (additional tips here.)

For more detail on what to do when a hurricane threatens click here.

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E-scooter sharing programs: are you covered?

Move over, ridesharing, there’s a new urban mobility player in town: dockless electric scooter (e-scooter) sharing programs are growing in popularity in cities across the U.S. They operate like bike-sharing programs, but they introduce some interesting insurance issues.

scooting into the future
Man riding an electric scooter

The concept is pretty simple: you download an app from companies like Lime and Bird that lets you find and unlock an e-scooter nearby for a small fee, often just $1. You can then, well, scoot off wherever you want to go, paying per mile of riding. These rented devices are “dockless,” so once the trip is completed, you can park your e-scooter anywhere that local ordinances permit – they can’t block public paths, for example.

We’re not talking about mopeds or Vespa-like scooters, which allow drivers to sit, can reach relatively high speeds, and often require a driver’s license. These are battery-powered Razor-like scooters, which require a you to stand, often can’t go faster than 15 or 20 mph, and usually don’t require a driver’s license.

You can cause a lot of damage at 15 mph, though – trust me, I’ve seen a person step in front of a fast-moving road bike. It wasn’t pretty.

So if you cause an accident, are you covered? That’s where things get a bit murky.

First off, in most cities, the company renting you the scooter probably won’t cover your liability – that’s part of the multipage user agreement you endorse by clicking the ‘I Agree’ button. You’re basically riding at your own risk. This may change, though, as scooting sharing spreads. San Francisco’s new permitting process, for example, requires these companies to have “adequate insurance” for each of their users.

As for your own insurance, whether you’re covered depends on the specific terms and conditions of your policies. You should speak to your insurer or agent. When they were created, the typical homeowners and personal auto policies didn’t really consider whether they’d cover a motorized scooter you just picked up off the curb. Expert opinion and wording are critical.

Homeowners: Under a standard homeowners policy (for example, the HO-3), motor vehicles are usually understood to be any self-propelled vehicle and aren’t covered. That is what an auto policy is designed to do. It’s pretty much the same for renters insurance.

Personal Auto: The standard personal auto policy excludes liability coverage for a vehicle with fewer than four wheels. The scooters we’re talking about have two wheels.

Personal Liability Umbrella:  Personal liability umbrella policies (PLUP) offer an extra layer of protection that kicks in when you reach the limit of your underlying homeowners or auto policy. They can also give coverage for things that are excluded from your other insurance policies. For example, unlike an auto policy, a standard PLUP does not usually exclude vehicles with fewer than four wheels.

The bottom line is: check with your insurer or agent about your coverages.

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