Flood Insurance: Protecting Your Home and Calculating Costs Amidst Climate Change in California
March 21, 2024
As experienced financial advisors, we help our clients navigate the ever-changing landscape of risks in their financial lives, which includes risks associated with climate change. In recent years, California has experienced an increase in flooding events due to changing weather patterns. Let’s discuss the importance of flood insurance and the steps you can take to protect your home from potential damage.
UNDERSTANDING THE RISKS
Climate change has resulted in more frequent and intense rainfall events, increasing the risk of flooding in certain regions. Even if you do not live in a designated flood zone, it is important to assess your vulnerability to catastrophic weather events. Rising sea levels, inadequate infrastructure, and compromised drainage systems can contribute to localized flooding.
THE IMPORTANCE OF FLOOD INSURANCE
Many homeowners make the mistake of assuming that their standard homeowners insurance policy covers flood damage. However, flood damage is typically not included in standard policies and requires separate flood insurance coverage. This specialized insurance can help protect your home and belongings against loss in the event of a flood.
CALCULATING THE COSTS
When determining the cost of flood insurance, several factors come into play:
Flood Zone Determination
Obtain a flood zone determination from the Federal Emergency Management Agency (FEMA). This will help you understand the level of risk associated with your property and aid in calculating your insurance costs.
Evaluation of Property Value
Assess the value of your home and its contents accurately. This evaluation will guide you in determining the amount of coverage needed for your specific circumstances.
Location and Elevation
Consider the elevation of your property concerning floodplains and bodies of water. Higher risk areas may result in higher premiums. Consult a professional surveyor to obtain accurate elevation information.
Deductibles and Coverage Limits
Evaluate different insurance carriers to determine deductibles, coverage limits, and what is included or excluded. Strive to strike a balance between an affordable premium and comprehensive coverage that adequately protects your home.
Mitigation Measures
Implementing flood mitigation measures, such as installing flood-resistant barriers or elevating your home, may help lower insurance premiums. Consult with experts to evaluate the potential cost savings and long-term benefits of these measures.
Professional Guidance
Consulting with an experienced insurance agent or broker is indispensable when determining your flood insurance costs. They can guide you through the options and help you make an informed decision based on your specific needs.
TAKING ACTION
Once you have determined the importance of flood insurance and calculated the costs associated with protecting your home, it's time to take action:
Research and Compare Policies
Survey the market for reliable insurance providers specializing in flood insurance. Compare their coverage options, financial strength, and customer reviews before making a decision.
Review and Update Regularly
Re-evaluate your flood insurance coverage periodically as home values, flood risks, and insurance offerings may change over time. Stay up-to-date to ensure your coverage remains adequate for your evolving needs.
Bolster Preventive Measures
Implement proactive steps to minimize flood risk, such as installing flood-resistant doors and windows or enhancing drainage systems around your property. These measures can potentially lower your insurance costs in the long run.
Educate Yourself and Your Family
Stay informed about local weather patterns, flood warnings, and evacuation routes. Create an emergency preparedness plan and share it with your family, ensuring everyone knows how to respond in the event of a flood.
Protecting your home from the increasing risks of flooding necessitates a comprehensive approach that may include obtaining flood insurance. Understanding the importance of flood coverage, calculating the costs associated with your specific circumstances, and taking proactive measures are all steps you can take now to protect your home and financial future. By prioritizing flood preparedness and mitigation, you can proactively navigate the challenges of climate change in California.
Articles and Commentary Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA. For disclosures, including additional information on credential designations of SHGA representatives please see our Form ADV Part 2A and 2B Disclosure Brochures, which can be obtained by clicking here.
Video Presentations All video presentations discuss certain investment products and/or securities and is being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect SHGA's or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
