Forecasts from the National Weather Service show that 2016 will have some of the most severe weather patterns in more than 30 years. A system known as “El Niño” could bring high amounts of rain and snow to the more arid locations of the country. These predictions could signal a dangerous trend for homeowners who depend on their standard insurance policies. Most of these homeowners are unaware that they need supplemental flood insurance policies to cover damages related to floods brought on by El Niño.
How El Niño Works
According to the National Oceanic and Atmospheric Administration, El Niño describes a climate phenomenon “linked to a periodic warming in sea surface temperatures” in the central Pacific Ocean. These changes in sea surface temperatures often result in above average temperatures and precipitation levels in the western U.S. The National Weather Service has issued reports stating that the upcoming El Niño event could lead to high levels of rain and snow in southern California and Arizona.
How Flood Insurance Works
Due to heavy losses from natural disasters, most commercial homeowners insurance carriers do not provide coverage for flood damage. Instead, homeowners must purchase flood insurance from the Federal Emergency Management Agency. Homeowners in flood-prone areas, such as those near large rivers or coastal cities, must often purchase flood insurance as part of their mortgage agreement. However, a recent report showed that more than 85 percent of all Americans do not have flood insurance.
Flood Insurance Rates and Limitations
For residents of flood-prone areas, flood insurance can be prohibitively expensive. Premiums in some areas can range up to $3,000 annually. Since commercial carriers don’t offer flood insurance, homeowners must pay flood insurance premiums in addition to their standard insurance policies. These policies cover up to $250,000 for home repairs and up to $100,000 for the contents. Flood insurance policies also require a 30-day waiting period for coverage, so policy holders would not be able to file a claim until at least 30 days after their application has been approved.
Source: CBS News
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NOTE: This blog post is a news story and does not imply an endorsement of Arguello Law Firm by any of the parties mentioned herein.