COLUMBIA, S.C. –As South Carolina approaches the first anniversary of the historic floods that hit the state last October, a national expert on insurance and risk management says there are some lessons the state, and its homeowners and business owners, should have learned.
Robert Hartwig is a new professor at the Darla Moore School of Business at USC and co-director of the Risk and Uncertainty Management Center there. He says one lesson applies to both homeowners and small business owners. “It is a popular misconception that your standard homeowner’s insurance policy or your small business policy covers you for flooding. It doesn’t. It is universally excluded. You need a separate policy,” he says.
The flood that hit the state last October has been referred to as a “thousand-year” flood, so some homeowners and business owners might think it’s such a rare event that, having gone through that already, they don’t have to worry about getting any more flooding.
“Absolutely they have to worry about it,” Hartwig says. “The reality of it is these events that are called one-in-one-thousand-year events are actually becoming more common, and that means even the events that are referred to as one-in-one-hundred-year events are becoming more common. And so consequently, when you think about it, during the life of your mortgage you have a very good chance of actually sustaining one of these floods and suffering the consequences, so it’s a very good investment. Coverage is inexpensive. It’s subsidized by the federal government. It’s available everywhere throughout the state.”
Michael Marsha owns Forest Lake Fabrics in Columbia. He didn’t think he needed flood insurance because the building itself was insured, but not the contents, and the store hadn’t flooded in the 52 years it’s been there. But when dams upstream failed during the floods, his store got slammed by a rushing wall of water. “It blew out the back of the building, blew out the windows in the front, sent all the fabric downstream. It was thrown half-a-mile downstream into Lake Katherine,” he says.
He was able to get a loan through the Small Business Administration and has rebuilt the store stronger. “But now, the bank wants to be secure,” he says. “I’ve got flood insurance on the building. I’ve got flood insurance on the contents.”
Other lessons that Hartwig says need to be learned from the flood: people who do buy flood insurance after an event like this but then, a few years later, if there are no more floods, they let it lapse. Then when there is another flood, and they are becoming more common, they’re in the same situation of not having flood insurance.
You can learn more about federal flood insurance, including the risk to your home, at www.floodsmart.gov.
