Message from Jim
Unfortunately, it has happened and will again in the future. I am speaking of Sandy, the huge storm which directly or indirectly will affect all American taxpayers. Twenty of the thirty most expensive catastrophes from 1970-2011 have occurred between 2001-2011, and 13 of those were in the United States (Michel-Kerjan). This is perhaps due to the cost of American homes and the desire to reside in or near high risk areas. With rising sea level and climate change, awareness of flood risk and protection needs priority.
Aside from dealing with personal property losses, recovering from flood damage becomes more difficult when considering those without adequate flood insurance, the cost of rebuilding to NFIP compliance requirements, and the increase of premiums due to the pay-out of many claims.
When constructing a new home, rebuilding in accordance to substantial damage requirements, or simply renovating, one cannot overlook the need to minimize flood risk for the protection of life, personal assets, and natural resources. Within the Special Flood Hazard Area, many will find that homeowners insurance does not provide flood damage coverage, and that flood insurance does not cover all improvements. Coverage is limited to policy specifics. For example, many items or improvements made in a basement are not insured through the NFIP.
It can get much worse for homeowners not required to purchase mandatory flood insurance in non-Special Flood Hazard Areas (C or X Flood Zones). Since homeowners insurance does not cover flood damage and they are without flood insurance, a homeowner can lose everything. Names such as Katrina, Isaac, Irene, and Sandy have made this potential tragedy a reality for too many citizens. This situation results in an increase in foreclosures, much hardship, and an eventual increase in insurance premiums for all applicants of the program, regardless if directly impacted by such severe storms. Additionally, due to the overall financial loss, tax increases should also be expected. Low or middle class income homeowners may simply not be able to afford coastal living.
Although the last two mentioned storms missed us in Maine, be aware that insurance executives and actuaries are crunching numbers for the adjustment of premiums because flood damage will continue to occue. The NFIP is a national program and each storm or claim has impact across the country, from land values to affordability of real estate along water bodies.
Since Vermont is a mountainous state with no coastal frontage, many Vermont citizens did not carry flood insurance to cover the excessive damage caused by Irene. Storm surge and wave action are not the only methods of storm damage. Excessive rain fills watersheds, rivers, streams, brooks, and can cause many types of damage inland. Even a state hundreds to thousands of feet above sea level can be impacted by ocean storms. Per FEMA, 25% of all flood damage occurs outside the Special Flood Hazard Area and approximately 90% of all disaster-related property damage results from flooding.