As the second major rainstorm in a week brings floods and other damage to the Bay Area, insurance companies are seeing the claims roll in. But those claims may not come close to covering the full scale of the damage.
“We’re definitely seeing a lot of water leakage claims on homes and businesses,” said Cyn Wang, CFO of Wang Insurance, which works with clients across industries in the Bay Area.
But because it isn’t included in general homeowner coverage, most San Franciscans are not covered by flood insurance. And that could mean expensive headaches as climate change threatens to bring more destructive weather events to the Bay Area.
A map published by the San Francisco Public Utilities Commission shows flood risk mostly concentrated in the Mission District and Bernal Heights areas, where high bay levels could push water west in low-lying areas. The city’s sea level rise vulnerability map highlights the virtually the entire eastern edge of the city as at-risk in the future.
But those assessments may not paint a full picture of risks to San Francisco residents and merchants.
“Around a third of flood claims are coming from non-flood areas,” Wang said, citing statistics from the Federal Emergency Management Agency. “The landscape is quickly changing.”
On Tuesday, California Insurance Commissioner Ricardo Lara issued a statement reminding insurance companies about their responsibility to cover damage from the mudslides that are a result of recent wildfires.
“I am alerting insurance companies to follow California law requiring they cover any mudslide, debris flow, or other damage that is caused by our recent wildfires so that people can recover quickly,” Lara wrote in the statement.
During wildfire events or other catastrophic storms, some companies will issue moratoriums that limit policy changes ahead of or during a catastrophe. That’s to ensure that companies can actually pay out their existing clients, said Jerry Becerra, president of Barbary Insurance Brokerage out of Oakland.
But most flood insurance is issued by FEMA, which places a 30-day hold on any new policy after it’s purchased, eliminating the need for a moratorium during widespread events.
People who live in flood zones are often required to have flood insurance, said Janet Ruiz, spokesperson for the Insurance Information Institute. But this event has been flooding cars and creating damage from downed trees and power outages, too, which would be covered under car policies or regular homeowner policies.
For those forced to evacuate, a storm can bring additional costs such as for temporary lodging: “Due to the Governor’s declared winter storm emergency, homeowners and renters who have been forced to evacuate [...] may have additional living expense coverage under their homeowner policy," said the state's Department of Insurance in an email.
Ruiz said she thinks the recent rain may push more Bay Area homeowners or business owners into considering adding flood insurance.
But to Becerra, the current disaster protections in place, particularly when it comes to fire policy, may even need reform to more closely model storm policies in the Gulf Coast area, where people can get covered for “named” storms—those categorized by the National Weather Service—specifically.
“I think our legislature really needs to step up and do something because this problem is not going away,” Becerra said.
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