Why You Need to Rethink Flood Insurance
I own a rural home that stands in the high desert of Arizona, about 200 feet from a wide wash. During hard rains, the wash often runs vigorously, but I never purchased flood insurance since I am not technically located in a flood plain.
I am rethinking that decision based on a number of factors, including more volatile weather patterns.
Most homeowners do not purchase flood insurance, unless their lenders force them to do so because their homes are located in high-risk flood zones. Yet floods are the most common natural disaster in the United States.
'Low Risk' Doesn't Mean What It Used To
Property damage in the United States from flooding exceeds $5 billion, according to the Federal Emergency Management Agency. The average flood costs a homeowner $48,000, according to Allstate Insurance. Nearly one quarter of those floods occur in areas considered low-to-moderate risk for flooding.
And during the course of a 30-year mortgage for a home in a 100-year floodplain, your property has a slightly greater than one-in-four chance of being flooded, according to the US Geological Survey.
Changing weather patterns worry the major insurers. As I tell people when they ask my opinion on insurance-related issues, “It doesn’t matter if you believe in global climate change, because the reinsurers do.” They believe significant weather changes will occur, which may include shifts in rain patterns, flooding patterns and increasingly turbulent weather pattern in general.
That's why now is the time to rethink your decision to purchase flood insurance.
Although much effort has been expended to update flood maps, they still remain out of date. The nation’s levee systems, too, are “haphazardly maintained at best,” according to one expert. What should a small business owner do?
Can You Afford Not to Insure?
First, call your agent to determine if you are in a flood plain. Even if you are only near an existing flood plain, you may want to consider purchasing flood insurance.
Ask your agent for a quote. Flood insurance may be expensive, but it may also be the only thing standing between you and your business’s ability to restore after a flood-related natural disaster. Where business owners only a few years ago never prepared for floods, they are now taking notice based on weather trends and increased U.S. flooding.
Disasters of any type are one of the main reasons businesses fail. Just a few inches of water in your building can cause major damage and business disruption. Visit www.floodsmart.gov to learn more about flood insurance and to calculate how much a flood may cost you. While this flood estimator relates to private homes, you may be surprised to find a small amount of water, as little as an inch, can bankrupt your business.
