Last month in Houston, TX, torrential rains dumped more than 15 inches in some areas. The following screen capture illustrates the fury of flood warnings in the region on April 18.
The severe weather resulted in massive flooding, impassable roads, citizen evacuations, closed schools and crippled businesses. According to local reports, April’s relentless downpour will cost Houston businesses hundreds of millions in lost sales and repairs.
Flooding continues to be a chronic problem in the nation’s fourth largest city. In an interview with The Dallas Morning News, Samuel Brody, director of the Environmental Planning & Sustainability Research Unit at Texas A&M University, described Houston as “the No. 1 city in America to be injured and die in a flood.” He further stated:
…mounting damages from flash floods point to a woeful lack of planning in a city that added 90,000 people last year alone and is a major cog in the national economy. He suggested the city should offer buyouts to homeowners in areas that chronically flood and turn the land into open space. The city should also upgrade its building code to mandate elevating structures in flood-prone areas.
To throw up your hands and say we’re going to be vulnerable and have hundreds of millions of dollars of impact every year in Houston just because it rains a lot is not the attitude we need to take…We are not thinking about the big picture.
Statistics from the National Flood Insurance Program (NFIP) a 48-year old program administered by FEMA, paint an even bigger picture for Houston’s flood insurance policyholders, many of whom are subject to lender-imposed flood insurance requirements. In 2015, property owners purchased 120,989 NFIP policies at a cost that exceeded $71,101,233. That’s more in one year than the average total claim payments per year ($37,752,174) since the program’s inception (for which statistics are available). The difference between the amount Houston property owners annually put into the NFIP and the amount they receive in NFIP claim payments underscores what every property owner should know about the price of coverage: not all flood risk is equal.
Commercial and residential property owners required to maintain flood insurance should be aware of the insured structure’s flood risk, and not solely rely on the structure’s location on a FEMA map (Flood Insurance Rate Map). Evaluating a building’s design, elevation, and construction to determine whether it was built in a flood-safe manner and proximity to flood control systems are a few factors that contribute to an accurate assessment of risk. Property owners with buildings at high risk of flooding (designated high-risk flood zones) may want to secure additional flood coverage. Property owners at low risk of flooding (designated low-moderate flood zones) may benefit from reallocating flood premium dollars to cover high windstorm deductibles, debris removal, and new landscaping after severe weather events.
In Houston and around the country, a proactive flood risk strategy can address or limit exposure, minimize loss, decrease operating costs and provide the opportunity to obtain flood coverage commensurate with actual risk. A flood risk evaluation provides a comprehensive property analysis, verifies if the flood requirement is justified, and determines if a designated high-risk property belongs in a low-moderate flood zone (reclassification). Reclassification provides premium cost savings and improves the value of the real estate investment.
Do you have a proactive flood risk strategy? Share your thoughts in the comments section of this post.
[Statistics Source: FEMA/NFIP]