Davidson County was soaked with more than seven inches of rainfall and the Nashville Fire Department rescued at least 130 people from vehicles, apartments and houses. Property damage is still being assessed.
Cleanup efforts began as the sun rose on Sunday, revealing water-logged homes and vehicles still partially submerged on flooded roadways. Local nonprofits launched emergency funds to support flood victims and coordinated volunteers to remove debris.
But once the full extent of the damage is realized, who foots the bill? According to insurance professionals, the majority of homeowners in Middle Tennessee do not have flood insurance, and renters may find themselves similarly uninsured for flood losses.
Flood insurance for homeowners and renters
Standard homeowner’s insurance does not cover losses due to flood damage. Flood coverage must be purchased separately through the National Flood Insurance Program.
“Unfortunately, a lot of renters, a lot of homeowners assume that they are fully protected for all losses, but flood is always a separate coverage — it’s always a separate policy,” Mark Friedlander, spokesperson for the Insurance Information Institute, said.
In Tennessee, just 2% of homeowners have NFIP policies, according to the Insurance Information Institute. The greater Nashville area fares slightly better: 4.2% of homeowners in Davidson County carry NFIP policies, and 4.4% carry flood insurance in Williamson and Wilson counties.
“More than 95% of homeowners in the greater Nashville area do not have flood coverage,” Friedlander said. Nationally, about 85% of U.S. homeowners are not protected against flood damage, though about 90% of natural disasters in the country involve flooding.
“As we just saw in Nashville, flooding can occur just about any place, any time,” Friedlander said.
NFIP limits coverage for residential properties to $250,000 for damage to the structure and $100,000 for contents of the home.
Landlords are responsible for damage to the physical structure of rental units, but any flood insurance held by a landlord doesn’t protect renters’ belongings. Standard renter’s insurance policies do not cover flood damage to personal possessions, though separate flood coverage for renters is available for purchase.
Renter’s NFIP policies cover only the contents of the covered home up to $100,000.
For those whose homes were damaged that do not have flood insurance, FEMA may help.
“Typically, in a disaster of this magnitude, FEMA funds will be approved for emergency usage in the community, but what we tell people is, don’t rely on FEMA to cover your losses,” Friedlander said. “You might get a small percentage of what you lost, but FEMA funds typically are not going to make you whole.”
The Insurance Information Institute recommends that those who experienced a loss report the loss to their insurance company as soon as possible and determine if it is covered. When it’s safe to do so, people should document the extent of any damage with photos and video, if possible. Any receipts and documentation of immediate out-of-pocket expenses related to the damage should be kept.
Potential changes to residential flood insurance
Last week’s downpour caused the worst flooding event in the greater Nashville area since a flood devastated large swaths of the region in 2010, damaging 10,900 structures. Only 3,908 of those property owners had flood insurance.
Jeff Zander, CEO of Nashville-based Zander Insurance, said flood insurance uptake within his agency has increased significantly in the years following the 2010 flood. Those who experienced the historic event firsthand are usually quick to renew their flood insurance each year, while those who moved to the area recently might be slower to inquire about purchasing flood insurance.
Flood risks have increased in the decade since the 2010 flood, but while Metro Water Services saw flood insurance policies in the county rise to about 7,000 following the flood, that number has now fallen to around 4,000, according to MWS Assistant Director of Storm Water Tom Palko.
Homeowners with federally-backed mortgages who live in a floodplain are required to carry flood insurance, but other lenders are beginning to require flood insurance for their mortgages as well, Zander said.
“This is no longer an infrequent issue, and it really needs to be taken into account when people are reviewing their insurance on their home, which typically is their most significant asset,” he said.
The Federal Emergency Management Agency planned to announce new rates for the program on April 1 in its first overhaul in decades. The proposed “Risk Rating 2.0” system would mark the first time the NFIP would tie premiums to individual properties’ actual flood risks, which could cause rates to rise significantly for those with high value homes in high-risk areas. Other homeowners in low-risk areas could see their premiums decrease under the new model.
Homeowners in multiple areas of Davidson County are likely to see flood insurance rates rise under the new system, according to estimates from the First Street Foundation, a Brooklyn-based research group.
Sen. Chuck Schumer, D-New York, put the brakes on the plan’s rollout last week due to concerns about potential dramatic premium increases, according to reporting by The New York Times.
Are vehicles covered for flood damage? It depends.
Vehicle damage caused by flooding is typically covered by optional comprehensive coverage that includes all non-collision-related damage.
About 80% of drivers in the United States carry comprehensive coverage for their vehicle, according to Friedlander. This would cover damage from floods, falling trees, hail, vehicle theft and other damage not caused by a collision.
Business flood coverage is more typical
Standard business owner’s insurance policies do not include flood coverage, but insurance professionals typically include flood coverage as an add-on in a business insurance package, Friedlander said.
For commercial properties, NFIP’s standard coverage limits are up to $500,000 for the structure and up to $500,000 for the building’s contents.
These flood insurance policies do not cover losses due to business interruption — for example, if a business must close for several weeks to make repairs after a flood event.
Business interruption coverage is also offered separately from standard business insurance, and about a third of businesses in the United States carry this optional coverage.
But business interruption insurance doesn’t cover flood losses. For that, business owners would need to purchase commercial excess flood coverage offered by private insurers to cover costs related to flood-related business closures. This type of policy would cover routine bills, lost income and expenses should a business need to temporarily move to another location, according to Friedlander.
Cassandra Stephenson covers business at The Tennessean, part of the USA Today Network — Tennessee. Reach Cassandra at [email protected] or at (731) 694-7261. Follow Cassandra on Twitter at @CStephenson731.