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Massive Flooding in South Carolina; Many Consumers Lack Flood Insurance

I.I.I. Offers Facts, Figures and Analysis on Floods and Insurance

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New York Press Office: (212) 346-5500; media@iii.org

 

NEW YORK, October 5, 2015 — The catastrophic floods in South Carolina over the weekend provide a stark reminder that flooding is the most common and costly natural disaster in the United States, causing an average of $50 billion in economic losses each year, according to the Insurance Information Institute (I.I.I.). In fact, most U.S. natural disasters declared by the president involve flooding.

 

Flood damage is excluded under standard homeowners, renters and business insurance policies. However, flood coverage is available in the form of a separate policy both from the National Flood Insurance Program (NFIP) and from a few private insurers. There is a 30-day waiting period before flood insurance goes into effect. The optional comprehensive portion of an auto insurance policy provides coverage for flood-related damages.

 

The NFIP provides coverage for up to $250,000 for the structure of the home and $100,000 for personal possessions. For businesses the coverage is $500,000 for a commercial structure and $500,000 for its contents. Private flood insurance is available for those who need additional insurance protection, known as excess coverage, over and above the basic policy or for those whose communities do not participate in the NFIP. Some insurers have introduced special policies for high-value properties. These policies may cover homes in noncoastal areas and/or provide enhancements to traditional flood coverage.

 

As of July 31, South Carolina had 199,540 NFIP policies in force, with written premium in force of $133.4 million covering $50.8 billion in property and contents. The NFIP provides detailed information for individual cities and counties.

 

None of the 10 largest floods (as ranked by NFIP payouts) occurred in South Carolina. However, the state was affected by three of the most costly U.S. hurricanes: Hurricanes Charley and Frances in 2004 and Hurricane Hugo in 1989. The I.I.I. has a detailed fact file on hurricane insurance in South Carolina.

 

The two largest NFIP payouts came from Hurricane Katrina in 2005 ($16.3 billion) and superstorm Sandy in October 2012 ($7.9 billion as of August 2015).

TOP 10 MOST SIGNIFICANT FLOOD EVENTS BY NATIONAL FLOOD INSURANCE PROGRAM PAYOUTS (1)

Rank Date Event Location Number of
paid losses		 Amount paid
($ millions)		 Average
paid loss
1 Aug. 2005 Hurricane Katrina AL, FL, GA, LA, MS, TN 167,971 $16,316 $97,134
2 Oct. 2012 Superstorm Sandy CT, DC, DE, MA, MD, ME, NC, NH,
NJ, NY, OH, PA, RI, VA, VT, WV		 129,235 7,946 61,482
3 Sep. 2008 Hurricane Ike AR, IL, IN, KY, LA, MO, OH, PA, TX 46,589 2,689 57,713
4 Sep. 2004 Hurricane Ivan AL, DE, FL, GA, LA, MD, MS, NJ, NY,
NC, OH, PA, TN, VA, WV		 28,290 1,612 56,964
5 Aug. 2011 Hurricane Irene CT, DC, DE, MA, MD, ME, NC, NH,
NJ, NY, PA, RI, VA, VT		 44,228 1,337 30,226
6 Jun. 2001 Tropical Storm Allison FL, LA, MS, NJ, PA, TX 30,784 1,107 35,955
7 May 1995 Louisiana Flood LA 31,343 585 18,667
8 Aug. 2012 Tropical Storm Isaac AL, FL, LA, MS 11,992 548 45,728
9 Sep. 2003 Hurricane Isabel DE, MD, NJ, NY, NC, PA, VA, WV 19,931 500 25,072
10 Sep. 2005 Hurricane Rita AL, AR, FL, LA, MS, TN, TX 9,528 475 49,820

(1) Includes events from 1978 to June 30, 2015, as of August 21, 2015. Defined by the National Flood Insurance Program as an event that produces at least 1,500 paid losses. Stated in dollars when occurred.

Source: U.S. Department of Homeland Security, Federal Emergency Management Agency; U.S. Department of Commerce, National Oceanic and Atmospheric Administration, National Hurricane Center.

 

Many homeowners and businesses owners fail to purchase flood insurance. A 2015 poll by the I.I.I. found that only 14 percent of American homeowners had a flood insurance policy. This percentage has been at about the same level every year since 2009. The percentage of homeowners with flood insurance was highest in the South, at 21 percent. Eleven percent of homeowners in the Northeast had a flood insurance policy. Nine percent of homeowners in the West had a policy, and 10 percent of homeowners in the Midwest had one.

 

RELATED LINKS

 

The I.I.I. has a full library of educational videos on its You Tube Channel. Information about I.I.I. mobile apps can be found here.

 

THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.

Insurance Information Institute, 110 William Street, New York, NY 10038; (212) 346-5500; www.iii.org

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