Latest North Bay disaster underscores growing need for flood insurance
After reeling from property damage caused by recent wildfires, North Bay residents now are confronting another natural disaster in flooding - a threat that is not covered by property insurance and which could escalate as storms become more volatile in a changing climate.
Unlike fire-related claims, home and business owners have to buy a separate policy to insure structures and contents damaged by floodwaters. Local insurance agents sell the policies through a Federal Emergency Management Agency flood insurance program.
Fawn Nekton, owner of the Gaffney Insurance Services in Occidental, said her agency serves many residents along the Russian River who were battered by rainfall last week that led to the worst flooding in the region in almost 25 years.
“We’ve been turning in flood claims and fielding questions ... and it’s just the beginning,” Nekton said.
Typically, homeowners obtain flood coverage if they have a mortgage and live in flood-prone areas - defined by the federal government as a place where there’s a 1 percent chance of having a flood occurring in any given year - equating, over the course of a ?30-year mortgage, to a 26 percent chance of flooding at least once for a home in a 100-year floodplain.
FEMA usually updates its national flood maps every five years to designate such high-risk flood areas. Sonoma County’s map was last updated in 2015.
In such high-risk locations, banks can’t issue federally backed mortgages, which comprise the vast majority of home loans, unless property owners buy flood insurance, noted McKenzie Smith, an insurance broker in Petaluma.
“If a lender has a property on a flood zone, ... it’s required,” Smith said of flood coverage.
However, there has been a growing trend of homeowners and residents who live outside of flood-prone areas buying policies to cover their properties in the event of storms.
“Floods don’t read maps,” said Frank Mansell, a spokesman for FEMA.
That was evident last week when record rainfall hit the Santa Rosa area, leading to extensive flooding even outside many flood-prone, low-lying areas.
“There were a lot of places that flooded (last week) that weren’t in a (high-risk flood) zone,” Smith said.
Indeed, FEMA has found that 20 percent of its flood insurance claims come from outside high-risk areas. In Sonoma County, there are 2,381 flood insurance policies in place and 21 percent of them cover properties outside locations most prone to flooding, Mansell said.
Since 1982, FEMA has paid about $91 million to property owners for flood-related damage in Sonoma County, he said.
Flood coverage for homes and businesses outside the most flood-prone areas is relatively affordable, insurance agents said. The cost depends on things such as property elevation, design and age of structure. Policy premiums often start at $325 a year and go up to $500 or more, agents said.
“That’s not too expensive” when you consider the average U.S. residential flood insurance claim in 2018 was about $30,000, said Janet Ruiz, spokeswoman for the Insurance Information Institute, an industry trade group.
For those living in high-risk areas, annual flood premiums have risen in recent years, Smith said. He has clients paying about $600 a year and as much as $2,500 annually.
“Premiums have been going up a large amount for the past three to five years,” Smith said.
Property owners without flood coverage have to rely on other less generous disaster relief, such as U.S. Small Business Administration loans or FEMA disaster grants, which average about $5,000 per recipient. Some try other options. After last week’s storm flooded The Barlow in Sebastopol, friends of Zazu Kitchen + Farm started a GoFundMe campaign to raise $50,000 to cover damage, pay employees and order replacement food. More than $24,000 had been raised as of Saturday afternoon.
Similar efforts were launched to help other affected businesses and flood victims.
With the greater frequency and severity of storms and wildfires driven by climate change, agents said property owners could benefit from flood insurance to cover damage from mudslides and other storm-triggered catastrophes. Large mudslides impacted parts of The Sea Ranch and Graton last week.
“There are people who are kind of high and dry but may be subject to an inundation of water and mud flow,” said Nekton of Gaffney Insurance.
Earlier this month, home insurers denied claims for damage to a handful of Sausalito homes impacted by a mudslide caused by heavy rainfall.
Amy Bach, executive director of United Policyholders, a San Francisco-based consumer advocacy group, said that should serve as “a cautionary tale” and another example of why property owners anywhere in the state should consider buying flood insurance.