Hurricane Harvey and the National Flood Insurance Fiasco

Hurricane Harvey

While heavy rain that comes into your home is covered by regular homeowners insurance, water that rises from rivers, lakes, and especially storm drains that may be clogged, will not be covered, unless you have a separate flood insurance policy.

"Now you know what it's like".

"The Treasury is loaning the flood insurance program money, but it can never pay it back, because before it can pay it back, there's another storm", Watson explained.

Neighborhood in Houston, Texas flooded from Harvey. Of course, proponents expected the federal government would pay for most of the dike's construction costs. But just in Harris County, Texas, where Houston sits, NFIP holds more than 240,000 policies, representing more than $60 billion in coverage, according to risk-modeling firm AIR Worldwide.

"All these people taken out in boats, they have a second problem: They have no insurance", said Robert Hunter, director of insurance at the Consumer Federation of America who used to run a federal flood insurance program. "We have properties that will flood multiple times ... let's help those people get out of those homes into a different house that is safe and secure for them", he said.

That's because only United States homeowners in the "100-year floodplain"-areas that have a 1% chance of flooding in any given year-have to buy flood insurance, and then only if they're taking out a federal mortgage loan or their private lender specifically requires it".

Attorneys and a Texas lawmaker are urging homeowners to try and file claims for property damage inflicted by Hurricane Harvey before Friday, when a new insurance law goes into effect.

Whatever the cost for flood insurance, Acevedo says it's worth every penny. Unfortunately, the flood insurance program teaches the exact opposite lesson, selling subsidized insurance whose premiums do not come close to covering the risks home and business owners in flood prone areas face.

Outside designated areas, flood coverage is optional, and prices are much lower.

Homeowners with water damage can get paid through their homeowners insurance but only if wind blows out a window or sends a roof aloft first, allowing the water in. This company tracks the financial impact of natural disasters.

"It's agonizing, it can take weeks and months, for some people in Sandy it took years", Jill Schlesinger said.

The waiting period might be shorter - around 10 to 14 days - if you buy private flood insurance. Also of importance, residents can rest assured that there are thousands of insurance claims adjusters in the Austin and San Antonio areas that are ready to enter the affected areas as soon as they can do so safely and are given permission by local authorities.

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