Business & Economy

El Niño: Should you buy flood insurance to protect your home? (FAQ)

A home off of Wood Road is inundated with mud and debris after a mudslide descended on the Forest Falls community in August 2014.
A home off of Wood Road is inundated with mud and debris after a mudslide descended on the Forest Falls community in August 2014.
Benjamin Brayfield/KPCC

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Floods don't normally rank among the top concerns of California homeowners, especially during these four years of historic drought. But many are reconsidering, given that forecasters are confidently predicting an El Niño storm system to hit this winter that would be among the most powerful on record. 

Since the beginning of September, Farmer's Insurance has seen a 152 percent increase in flood insurance sales in California versus the same period last year, according to Jeff Hinesly, the National Flood Insurance Program Director for Farmers Insurance Group. Nationwide sales have been flat.

"I would say it’s definitely El Niño related,” said Hinesly.

Insurance brokers say customers are often confused about flood coverage, thinking that it is included in their existing homeowners or renters policy (it almost never is) or that if they are not in a FEMA-designated high-risk flood zone, they don't need insurance (they still could be at risk). To help, we've putting together some frequently asked questions.

How do I know if I need flood insurance?

Start here. On FEMA's website, once you enter your address the agency provides your "Flood Risk Profile" and you can find out whether your home lies in one of three zones:

Do I still need coverage if I'm not in a high-risk zone?

Yes, according to FEMA, because the agency says people outside of mapped high-risk flood areas file over 20 percent of all flood insurance claims and get a third of federal disaster assistance for flooding. 

“The thing you need to understand about flooding is anywhere it can rain it can flood," said Hinesly, pointing to the recent floods in South Carolina.  “A city street can become a raging river.”

Should I shop around for coverage?

There's no need, because you'll get the same price from the more than 80 companies that sell flood insurance. Rates are set by the the National Flood Insurance Program, which was created by Congress in 1968, based on the date and type of construction of your home and the area you are located in. The program subsidizes about 20 percent of homeowners who live in the highest risk areas, according to Hinesly.  The average flood insurance premium was about $700 last year.

What's the maximum amount of coverage?

Up to $100,000 for the contents of a house and $250,000 for damage to the house. From 2010 to 2014, the average flood claim nationally was about $42,000, according to FEMA. However, in Southern California a $250,000 limit would often not come close to covering the full value of your house. Homeowners that want additional insurance can buy supplemental coverage. 

What exactly is covered by flood insurance?

Sheree Nelson, an insurance agent in South Pasadena, says she's been getting many calls lately from people confused about flood insurance.

“Many of our clients are near a hillside and they are thinking about landslides,” said Nelson. 

However, flood insurance doesn't cover damage from landslides and other "earth movements." Damage from mudflows – defined as rivers of liquid and flowing mud on the surface of normally dry land – would usually be covered.

In general, for damage to be covered it has to have been caused by the flood directly. For instance, damage from a sewer backup would covered if the backup is a direct result of flooding but if the backup is caused by another problem, you are on your own.

FEMA's website has much more information about what flood insurance covers.

What else is unique about flood insurance?

There is a 30-day waiting period, so if you're worried about El Niño, now is probably a good time to start shopping. You are also required to pay for a full year's coverage in advance, unlike most insurance that you can pay for monthly. So, no buying flood insurance in November and canceling it in June.