Insured for disaster: How to prepare for flooding, fires

Jan. 25--For homeowners, renters or businesses still uninsured following a year like 2017, local agents say they should reconsider the need for being prepared for the unknown.

"In terms of flood insurance, the Oroville spillway incident really increased awareness for the need for coverage. I had a lot of clients on the fence before that, but afterwards we were able to establish a policy," said Zach Zall, vice president of Huntley-Bravos-Zall Insurance Brokers in Marysville. "My feeling is, if you live in this area, flood insurance should be a priority. It could be the difference between financial ruin and getting back on their feet."

The risk of a potential flood or wildfire is ever present in the Yuba-Sutter area due to its location -- considering the area either sits on the valley floor surrounded by rivers or is up in the foothills where combustibles are plentiful.

The good news is that there are options available for Yuba-Sutter residents. The bad news is the cost of locking down a policy varies -- sometimes drastically -- depending on where a person lives.

"The issue isn't whether or not it is available, the question is how much are people willing to pay for it," said Mariah Davis, president of Oakview Insurance Services, Inc. in Yuba City. "For example, when you look at fire insurance: for a home in the Edgewater area, it would probably run you anywhere from $500 to $700 a year. If you were to take that exact home and move it into the foothills, it would be more like $2,000 to $3,000 a year."

Fire insurance

Most homeowner's insurance policies in California cover fires. However, earlier this year the state's Insurance Commissioner Dave Jones highlighted a growing problem with residents having difficulties obtaining fire insurance in areas considered "high-risk" -- both due to availability and affordability. The issue has been growing over the past two decades, he said, due to wildfires and the destruction they've caused throughout the state.

Zall said last year's catastrophic losses due to wildfires didn't help the situation. The losses will put a major strain on insurance companies and reinsurance companies -- those that provide insurance to insurers -- which could ultimately come down on the policyholders, he said.

Though there are mechanisms in place to prevent providers from spiking rates without approval from the Department of Insurance, that's not the problem, he said.

"What could happen is carriers can pull out or back out of the local market and not insure homes in high fire risk areas, which means many policyholders could potentially be left without many options," Zall said.

That scenario hasn't played out yet, but even if it did, those living in "high-risk" areas would still have an option: the California FAIR Plan. Still, Zall said, that coverage is more like a "last resort policy" and that residents should always look elsewhere first due to the plan being a very "stripped down, basic fire policy."

For those that run into problems -- likely those in areas like the foothills where there are issues with overgrown brush and vegetation -- Davis said there are things that can be done to make an insurer more likely to offer a policy. Those steps include things like creating a defensible space around a home or structure and clearing out fire fuels.

Flood insurance

Flooding is the nation's number one natural disaster. Unlike fire -- covered under most homeowner's insurance policies -- flooding is not, which is a common misconception, Zall said.

For some, flood insurance brings a peace of mind. For others, it's a requirement, like for people who took out a federally-backed loan to buy a house in a designated high-risk area.

Both Yuba and Sutter counties participate in the National Flood Insurance Program through the Federal Emergency Management Agency, meaning there are policies available for all interested residents. The cost for flood insurance depends on where a home or business is located.

Areas like downtown Yuba City are considered preferred zones -- or areas where there is moderate to minimal flooding hazards. Both Zall and Davis said a typical policy in one of those areas will cost about $500 annually. Renters can even obtain flood insurance for as low as $100 or less to cover any losses of personal property, Zall said.

Areas deemed high-risk -- like in south Sutter County where levees don't provide as high a level of flood protection -- will run higher.

"I think too many times we misunderstand the damage water can do, and how only one inch of water can cause tens of thousands of dollars of damage," Zall said. "We often think flooding can only occur if there is a dam failure or levee break, some sort of catastrophe, but it can start from something as simple as street flooding."

The maximum limits available under the NFIP for residential structures is $250,000 and $100,000 for personal property. Commercial policies have slightly higher limits at $500,000 for both structures and personal property.

Zall said for people who have homes or property valued at more than those limits can also purchase an "excess flood policy," which can essentially cover the gap from where the NFIP left off.

"An important thing to remember when purchasing a policy through the National Flood Insurance Program is that there is a 30-day wait for it to go through," Davis said. "A lot of companies only have a 10-day wait, but that program takes longer, so it's important to purchase a policy well in advance."

Flood insurance policies can also be purchased through private insurers.

For more information on ways of getting insured, visit www.insurance.ca.gov.

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