The month of August is not particularly kind to the state of Louisiana. In 2005, Hurricane Katrina and a failed levee left a trail of devastation. Eleven years later, this month, a no-name storm delivered an unrelenting rainfall resulting in flash flood emergencies, an overtopped levee, and widespread flooding throughout southern Louisiana. The Red Cross characterized this severe weather event as the worst U.S. natural disaster since Hurricane Sandy [Source: CNN] as more than 100,000 Louisiana homeowners and businesses seek federal assistance.
Statistics from the National Flood Insurance Program (NFIP) a 48-year old program administered by FEMA, and local reporting by The Advocate, paint an even bigger picture for Louisiana’s current flood insurance policyholders. In 2015, property owners purchased 452,823 NFIP policies at a cost that exceeded $350,912,990. [Source: FEMA/NFIP] Yet, in four parishes hardest hit by the August 2016 event, flood insurance program participation ranged from one to 22 percent according to The Advocate.
Only about one in eight businesses and residences in East Baton Rouge Parish is covered by flood insurance, a reality that is sure to take a financial toll on those living in the vast swaths of neighborhoods that flooded during this weekend’s storms.
The figure is higher in Livingston Parish, where 22 percent of structures carried the flood policies expressly not provided by homeowner’s insurance, but is slightly lower in Tangipahoa Parish, where about 12 percent of property owners hold flood policies. In St. Helena Parish, just 1 percent of all property owners have flood insurance.
Read the entire story at theadvocate.com.
This irony underscores what every property owner should now know: not all flood risk is equal.
Commercial and residential property owners, whether required to maintain flood insurance or not, 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 Louisiana 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, including a thorough elevation certificate audit for errors and omissions. The 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.