Sonoma County experienced some of the worst flooding in years this past winter, and some business owners are still recovering from losses. From January and February, the county sustained approximately $15.4 million in damages.
With forecasts of increased storm activity, and the pending expiration of the federal government’s program which provides most of the nation’s flood coverage, those thinking ahead are thinking about flood insurance.
Adjusters say, ‘No, no, no’
“We experienced some big losses just in January, and a lot of people weren’t covered, or were under covered,” said Colin Smith, an agent for Northwest Insurance Agency, which has an office in Santa Rosa.
The reason for that is, people think they don’t need it, are willing to take the risk, and/or find the insurance too expensive.
Roger Hicks, co-owner of The Village Inn in Monte Rio on the Russian River in Sonoma County, was one of those.
When Hicks and his partner bought the Inn in 2015, they didn’t want to pay for the insurance, on top of all their other business expenses, but it was required by the bank that held the loan, as it sometimes is.
The Inn is in the highest rated flood zone for the area — this year it has flooded five times. In 2015, the cost to insure the Inn for flood damage was $6,600 per year. The next year rates doubled to $12,000, and in 2017 it was more than $17,000.
Hicks is insured under the National Flood Insurance Program, which provides almost all the flood insurance in the country, Smith said.
The program offers basic coverage, only the building and its contents are covered. There is also a wait period of 30 days before it kicks in.
The Inn suffered about $50,000 in damage in last winter’s storms, including damage to the wiring, plumbing, and buckling of floor tiles.
Is Hicks glad he had the insurance? Only mildly.
“When they assessed the damage, they (adjusters) said, ‘No, no, no’ to everything. The insurance company fought us every step of the way and made it extremely difficult (to get paid),” he said.
Among other things, insurance assessors claimed damage to the building’s foundation was earthquake-related, and not caused by the flooding, he said.
Six months after filing a claim, Hicks said the insurance company did pay out a small sum.
In a high risk flood zone a building might typically cost $5,000–$20,000 to insure, depending on its location in relation to sea level and nearby water, and amount of coverage requested, Smith said.
“In a low risk flood area, the same buildings cost $600 to insure … people in Petaluma and Napa generally will experience lower flood rates than say people in Monte Rio, however there are definitely areas of Napa and Petaluma that may geographically fall in a flood zone and could experience the higher rates,” he said.
Covered vs. not covered
Under the NFIP, protections for small businesses losses such as business interruption and significant disaster preparation, aren’t covered.
Government insurance also takes longer for a payout on a claim than private insurance, said Casey Soares, senior vice president for property specialist Woodruff-Sawyer & Company.
Although some smaller companies still offer private insurance, most got out of the flood insurance business years ago, not wanting to take big risks with things like hurricanes.