In the aftermath of Hurricane Harvey, here’s what you need to know about flood insurance

Barry Horvitz embraces his wife Kim while standing outside their home after removing items damaged by floodwaters in Houston. (David J. Phillip/AP Photo)

As tens of thousands of people in Southeast Texas try to recover from the devastating floodwaters from Hurricane Harvey, many homeowners will discover damage to their homes isn’t covered.

The problem? Many people didn’t have flood insurance.

“The vast majority of homeowners in the area devastated by Hurricane Harvey lack flood insurance, leaving many who escaped the storm with little financial help to rebuild their homes and lives,” wrote The Washington Post’s Heather Long.

Home insurance typically covers wind damage but not flooding. You have to buy a separate flood insurance policy from the government-run National Flood Insurance Program,

A Washington Post analysis of Federal Emergency Management Agency data found that only 17 percent of homeowners in the eight counties hardest hit by Harvey have policies that cover flooding.

And many won’t get enough help from the government. Grants from Federal Emergency Management Agency are capped at $33,300.

“Most receive significantly less,” Long says. “Funds will be even tighter if Congress doesn’t provide additional emergency funding for Texas soon.

Leroy Moore, whose home in Northeast Houston was flooded, had canceled his flood policy because it was too expensive.

“In Texas, the average cost for a flood policy is $500 a year, but it can go up to more than $2,000 for a home inside a floodplain,” Long reports.

The federal insurance program is set to expire at the end of September, and new polices can’t be issued unless Congress extends the program.

Federal flood insurance program in limbo on Capitol Hill as Harvey’s toll mounts

Flooding from Harvey will test the already strained federal flood program.

“After a series of major storms caused floods in the last 12 years, including Hurricane Katrina in 2005 and Superstorm Sandy in 2012, the program is roughly $25 billion in debt,” reported CNNMoney’s Chris Isidore. “It has less than $2 billion in cash on hand, with only $6 billion more left in borrowing capacity as it prepares for the claims that will be filed due to Harvey. The financial strain is only going to get worse, experts say, thanks to a combination of climate change and more sprawling development, which can make flooding worse, since asphalt can’t absorb rain the way undeveloped land can.”

Even if you have a flood policy, you may not be fully protected.

“Claims on existing policies, which can see payouts up to $350,000, are also at risk as the program approaches a $30 billion borrowing limit that experts say Harvey’s toll could quickly breach,” reported The Post’s Mike DeBonis. “Harvey is certain to affect the flood insurance debate.”

Want to be mad about government insurance? Be mad about the program that will be critical after Harvey.

About half of flooded homes were covered by flood insurance during Hurricane Katrina in 2005.

The tragedy in Texas should be your wake up call to check your homeowner’s insurance policy. Read up on what’s covered.
— Hurricane Harvey victims face big bills

FYI: “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. If the water rushes through the floorboard or walls, you’re not covered,” the Associated Press points out.

— The Consumer Federation of America offers some tips for anyone who may face damage from a storm
What Consumers Should Do to Get Fair Claims Payments in the Wake of Hurricane Harvey

— What to Do After a Catastrophic Hurricane Harvey Type Flood Damages Your Home

— Water damage: Seven home insurance scenarios

— When Can You Claim for Water Damage Coverages on Home Insurance: How to Avoid Being Out of Luck and Make Sure Your Claim Gets Paid

— Know your rights: Flood water damage if you’re a renter

— After the storm: How to fight your insurance company

Color of Money question of the week
How are you surviving in the aftermath of Hurricane Harvey? If you live in the path of Harvey, I want to hear how you’re managing financially. Send your comments to Please include your name, city and state. In the subject line put “Hurricane Harvey” in the subject line.

Live chat today
I’m live every Thursday from noon (ET) to 1 p.m. to take your personal finance questions.

Today my guest is Rachael O’Meara author of this month’s Color of Money Book Club selection “Pause: Harnessing the Life-Changing Power of Giving Yourself a Break”

Read my review: Why you need to hit pause on your busy work life

To join the discussion or read the transcript if you can participate live clicks this link.

Family financial fights
It can get very messy emotionally when you mix finances and family. Do you have some family financial drama? If so, perhaps I can offer some advice on how to work through your issues — or avoid them all together. Tell me about your situation. Send your family financial dilemma to Put “Family Fights” in the subject line.

Powerball lessons even if you don’t win
Last week I asked: What would you do if you won the lottery?

Sylvia Gordon of Alexandria, Va., dreamed of helping family and her community

“If I were to win the lottery, the first settlement would be for my children, two daughters and my grandson, enough so that none of them would have to make decisions based on what’s in their bank accounts only,” she wrote. “My grandson’s education would be covered; he’s only 6. I would set up an endowment fund at my synagogue so that all tuition for school and education expenses would be paid for. I would require, however, that a nominal fee be paid for each child. Too often people do not respect, or take seriously, things that handed to them for free. Then, depending on the amount left, distributions to support other Jewish religious issues, women’s issues and natural resource, conservation issues (wilderness, wildlife, National Parks , etc.) The great difficulty in selecting organizations and issues is that there are so many worthy groups that deserve help. All this of course [would happen] after hiring proper legal and financial assistance and taking care of my own needs for life.”

Glenn Parsons, a contractor in Maryland had a list.

He said he would:

1) Go to work the next day and act like nothing happened.
2) Seek a lawyer’s retainer immediately.
3) Meet with a certified financial planner; I already have one.
4) Invest, invest and invest for retirement.
5) Pay off my mortgage.
6) Donate money to a number of my favorite charities/organizations: UNICEF, Humane Society, Heifer Intl.
7) Enjoy an expensive (for my current means), not too extravagant vacation. Just one.
8) Retire at 65!

Donald from Pleasanton, Calif., wrote: “If I won the lottery I would offer this deal to Donald Trump: If you resign, I will give you all the money.”

Color of Money columns this week
Knowledge isn’t power. The right knowledge is power.

Stay informed about your money. Read and share some recent column.

— Don’t be fooled by Hurricane Harvey flood scams

— Making a dent in student debt with ‘Freshman Year for Free’

Have a question about your finances? Michelle Singletary has a weekly live chat every Thursday at noon where she discusses financial dilemmas with readers. You can also write to Michelle directly by sending an email to Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read more Color of Money columns, go here.

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