South Carolina swamped with flood insurance issues

High damages combine with reports that most affected property owners lack flood coverage to create big problems

By Lyle Adriano

South Carolina was recently devastated by what experts called a “1,000-year flood,” but its problems are far from over. Many properties in the affected areas—both residential and commercial—have suffered severe floodwater damage, likely exceeding $1 billion in economic losses. Concerns on whether or not the state has the resources to pay for the damage have been raised.

A report on CNBC pointed out that South Carolina, a state with almost 2.2 million housing units, has fewer than 200,000 flood insurance policies in place. Although South Carolina is one of the most insured states in the National Flood Insurance Program (NFIP), it is painfully clear that not all affected property owners hold a policy for flooding.

Residential flood insurance for Americans is often handled almost exclusively by the NFIP, but even if all of the state’s homeowners opt for the program, there are worries that the program would not cover all damages.

"Based on current active National Flood Insurance Program (NFIP) policies in place, it is expected that most of the residential damage will not be covered by insurance," said a report issued by reinsurance broker Aon Benfield.

A typical NFIP policy will cover any direct physical damage the insured property has sustained up to the replacement cost or the value of the damage up to the policy’s cap. The average cost for a policy is $700 a year. Unless the policyholder opts for comprehensive coverage, NFIP will not cover car damage.

Additional measures have been taken in order to cover for the NFIP’s shortcomings. The Federal Emergency Management Agency plans to provide grants to homeowners who qualify for assistance. The South Carolina Department of Insurance has determined that carriers will need registered adjusters.
 

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