Since 2000, New Jersey has experienced five federally declared disasters due to flooding. Hurricane Ivan crashed ashore in July 2004 and quickly became a category five hurricane. New Jersey residents were hit with intense rains, causing millions of dollars in damages to homes and businesses. And the spring floods in April of 2007 covered New Jersey in almost a foot of rain. Extensive flooding destroyed land and property, causing every county in New Jersey to be declared a federal disaster area. And flooding just this past spring continued that pattern of extensive damage to the Garden State.
According to the National Flood Insurance Program (NFIP), flooding in the past five years (2003-2008) cost the state dearly. Insured flood losses in New Jersey totaled approximately $266 million. Since April 2007, flood insurance policies in New Jersey have increased by 4.6 percent to more than 225,000 policies as of April 2008. However, according to NFIP, many New Jersey households remain at risk. There are more than 3 million households in New Jersey (2000 U.S. Census), but just 225,171 insurance policies in effect. Only seven percent of the state’s households are covered.
The Need for Flood Insurance
“I would say it’s a good idea for everyone to have them [flood insurance policies],” says Matt Brady, director of media relations for National Association of Mutual Insurance Companies, which is based in Washington, D.C. Flooding is something that is generally not covered under regular homeowner insurance policies, says Brady, which is why the NFIP was created in the first place in 1968 by an act of Congress.
Flood insurance is available nationwide and everyone’s home and property is vulnerable, says Brady. “I mean we have seen floods in Tennessee to New England, pretty much anywhere in the past year or so. So anyone can buy it. There are people that are generally required to buy it,” he says, referring to provisions by banks and mortgage lenders. “If you have a federal loan, the FHA requires that you get flood insurance to protect the property.”
Flood insurance is underwritten by the federal government, but purchased through write-your-own companies, which are private insurance carriers that get paid a fee from theNFIPto service the policies. Many large insurance companies, such as Hartford and Travelers, have a separate arm that specifically handles such insurance. But even so, you are still insured with the NFIP under the same policy, same rates and same coverage.