Study: Less than 10 percent of home insurance policyholders in Irene region had flood coverage
Less than one in 10 home insurance customers in New England and the Mid-Atlantic states reported carrying flood insurance before Hurricane Irene, according to a study released Sept. 1, 2011, by market research giant J.D. Power and Associates.
“Unfortunately, the majority of homeowners affected by Hurricane Irene were not covered for flood damage, and many may find their claims denied,” Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates, says in a news release.
While a higher proportion of policyholders in the Gulf states — more than 25 percent — carry flood insurance, “this is still a relatively low proportion, considering the frequency of hurricanes and other severe weather events in the region,” J.D. Power and Associates says.
Florida by far has the largest percentage of policies through the flood insurance program, followed by Texas. According to a 2011 poll from the Insurance Information Institute, 14 percent of U.S. homeowners have flood insurance.
Standard home insurance policies don’t cover flood damage. Americans must turn to the National Flood Insurance Program or a few private insurers for flood coverage. About 5.6 million U.S homes and businesses are insured through the federal program.
Bowler says homeowners must ensure they’ve got sufficient home insurance coverage before a disaster hits.
“While many homeowners may not give much thought to their insurance under normal circumstances, the moment they have to file a claim, the value of coverage becomes realized,” J.D. Power and Associates says.
The study also found that about 16 percent of home insurance policyholders are carrying less coverage than would be required to fully rebuild their homes if they were destroyed.
Replacement-cost coverage is needed to fully cover the cost of building a new home. Cash-value coverage reimburses you for the replacement cost of your home, minus any depreciation the insurer calculates for structural “wear and tear.” Depreciation isn’t factored into replacement-cost coverage, which is a little more expensive than cash-value coverage.