With Hurricane Irene on its way to the northeast, many people are checking their insurance. People from North Carolina up through Maine are calling their agents and checking their policies. It might be a bit too late for that, however.
Most people are not covered for flood insurance, especially those who are in coastal areas or other flood prone areas. It is usually a carve out on home insurance policies, especially since Hurricane Katrina cost insurers $80 billion when New Orleans was flooded.
In many areas, the only option for flood insurance is the federal flood insurance program offered by FEMA. Many people opt not to participate in this, however, as it can be extremely expensive. Typical premiums can be over $1500 per year.
2011 is already shaping up to be a very expensive year for insurers with $90 billion in claims so far, beating 2009 and 2010 combined. Some major events include the earthquake in New Zealand and the Japanese tsunami. Most experts are expecting significant rate increases in the future to make up for the damages this year. For the last 3 years, insurance rates have held steady with fierce competition and a tight market, but experts think even a small event may cause the industry to become more risk averse.