Southwest floods prompt local homeowners to consider additional insurance coverage

This blog recently looked at the effects of a large storm system in the Southwest that triggered flash flood warnings in five states. As we discussed, the Phoenix area was hit hard by the storm, but heavy rainfall caused flooding throughout the region, including in parts of Nevada and Utah.

This event has prompted many of the area's residents to start asking about flood insurance policies, according to the Spectrum & Daily News, based in St. George, Utah. Local AAA insurance agent Chet Johnson told the newspaper that he believes less than 1 percent of his residential clients have flood insurance, and he has never written a flood policy for a renter.

Homeowners unaware that standard policies don't cover damage from floods

While water damage may be covered in some cases, typical homeowners' and renters' policies do not cover damage from surface waters entering a structure. To be protected in this contingency, property owners must purchase separate coverage through the National Flood Insurance Program (NFIP). According to Johnson, such coverage is uncommon because it is only required when a mortgage lender determines a property it is financing is located in a flood zone.

The recent flooding revealed that many homeowners were apparently unaware of this gap in their insurance coverage. The Spectrum highlighted the story of Staci Bradley, a resident of Ivins City, whose home sustained more than $100,000 in uninsured losses as a result of the flood. With no flood policy, her family has little choice but to pay for the repairs out of pocket.

The Spectrum spoke to several local home restoration professionals, who indicated that they have been "bombarded" with work requests since the flood. Lonnie Hawley, general manager of flood and fire restoration company HiCaliber, told the source it is important for homeowners to call in professionals if their property has has been exposed to floodwaters. A do-it-yourself repair effort may leave residual moisture, which can lead to mold damage.

"We have the necessary equipment to find out what the moisture content is in a wall," Hawley explained.

Unfortunately, the demand for such services can easily exceed the supply in the aftermath of a flood, prolonging the recovery process for affected homeowners.

Flood risk is more widespread than many realize

Flooding is most commonly associated with coastal areas, but as we've seen in the Southwest recently, inland areas are also at risk. Johnson of AAA noted that structures near lakes and rivers are exposed to higher risk, as are any properties located in an area with inadequate drainage infrastructure.

The Federal Emergency Management Agency (FEMA) has been updating the flood risk maps used to determine which properties require flood insurance. In many areas, these revised maps place a significant number of residential and commercial properties in high-risk zones for the first time.

Pronto can provide accurate replacement cost estimates to assist financial institutions seeking to ensure that all properties in their portfolio have adequate insurance coverage.