Let's Talk First

Tips & Resources

Are You Prepared for Flood Damage?


An inch of water might not seem like much, but FEMA says that’s all it takes to cause $25,000 of damage to a home. Everyone in Hawaii should be aware of their flood risk. If you haven’t looked at your risk recently, now is a good time to do so because risks are increasing.

New Flood Risk Assessments

The flood maps FEMA previously used to assess risk and determine insurance rates are woefully out of date. To address this, FEMA has introduced Risk 2.0, a new pricing methodology based on current industry best practices and new technologies. As of April 1, 2022, all new or renewing policies are subject to the new pricing method.

For many homeowners, this change has resulted in higher flood insurance rates. According to FEMA, there are 61,400 National Flood Insurance Program policies in force in Hawaii. When Risk 2.0 went into effect, 7,924 of these policies – or 13 percent of the total – actually saw rate decreases. However, 48,098 policies (or 78 percent) saw increases of up to $120 per year. Additionally, 9 percent of policies saw even steeper increases.

What It Means If Your Rates Went Up

For homeowners who saw their rates decrease, the new pricing methodology should come as a pleasant surprise. However, the majority of homeowners saw price increases, and they’re probably upset. They may even be thinking about canceling their flood insurance.

However, going without flood insurance may be a bad idea. For one thing, many lenders require coverage for homes located in high-risk areas, meaning dropping coverage could put your loan in jeopardy if you have a mortgage. Secondly, higher rates indicate you have a substantial flooding risk.

FEMA says that the average flood claim payout over the last decade in Hawaii has been $42,300. If your home is damaged by flooding, that’s a lot of money to pay out of pocket. Even if you’re not in a high-risk area, you’re still likely to be at some risk. In fact, FEMA says that about 25 percent of all flood insurance claims occur in low- to moderate-risk areas.

Flood Damage Is NOT Covered by Homeowners Insurance

A Forbes Advisor survey found that 36 percent of homeowners think a typical homeowners insurance policy covers damage from flood water. This is a dangerous misconception. Although homeowners insurance can cover some types of water damage – for example, water from a pipe that bursts unexpectedly – most policies exclude flood damage. Unfortunately, homeowners who aren’t aware of this may not take steps to secure the coverage they need.

For coverage against the flood damage, you need flood insurance. However, the National Flood Insurance Program is not your only option. You can also purchase flood insurance from private companies, where you may be able to secure better rates and coverage terms.

Businesses Also Need Flood Insurance

Floods can damage businesses as well as homes. Once again, without coverage specifically for flooding, you probably won’t be covered.

According to the Insurance Information Institute, commercial property insurance does not provide coverage for flood damage. You won’t find flood damage coverage in most business owners policies (BOPs) or Commercial Package Policies (CPPs), either. To secure coverage against flooding, you need to purchase a flood insurance policy.

Manage Your Risks

The National Weather Service says that Hawaii sees an average of 25 to 30 inches of rain a year, and some areas can have up to 15 times that amount. The City and County of Honolulu says flooding can occur due to rainstorms, tsunamis, and hurricanes – and Hawaii experiences 11 flash floods each year on average.

FEMA recommends three key steps to protecting yourself: one, know your risk; two, insure your property; three, reduce your risk.

You can use the Hawaii Department of Land and Natural Resources Flood Hazard Assessment Tool to gain an idea of your flood risks. For ideas on property improvement projects to reduce your risk, check out the FEMA brochure. Finally, an insurance agent can help you review your insurance options.

Are you prepared for flood damage? Find a FICOH agent.