Washington State Insurance Commissioner Mike Kreidler is here to help us spread the word to consumers about an important homeowner insurance coverage some may not know about.

Special message from
Washington state Insurance Commissioner Mike Kreidler

Mike Kreidler

There are two natural disasters that people in Washington State are at high risk for but most aren’t insured for – floods and earthquakes.

Many people’s biggest financial asset is their home, yet many homes aren’t protected against flood or earthquake damage or loss. In some cases, it’s because the property owner may not be aware that their homeowner insurance doesn’t cover either risk.

While most people may not necessarily correlate Washington State to large floods, 90% of all federal disaster declarations in our state were related to flooding. In 2016 alone, people in Washington filed 430 National Flood Insurance Program (NFIP) claims totaling more than $7 million. 

Our flood risk is tied to several factors, and all are related to climate change. Sea-level rise is affecting many low-lying communities along our shorelines. Increased precipitation is collecting in the river basins causing flooding. Wildfires on both sides of the state leave land more susceptible to flooding due to the loss of vegetation and inability to absorb water. 

Traditionally, flood insurance has only been available through the NFIP, run by the federal government. However, an emerging private flood insurance market is gaining momentum in many areas, including Washington State, which is a good development for homeowners and businesses.

NFIP is only available on properties that are located within designated communities. NFIP policies limit coverage to $250,000 on most residential buildings and $100,000 for contents. It limits coverage to “actual cash value,” which can be as little as 50% of the true replacement cost of a property loss. NFIP policies don’t cover the loss of use of the property or additional living expenses, which is what it costs to live elsewhere while your home is uninhabitable. 

Private flood policies can set higher coverage limits to lessen the economic risk for the policyholder. They can also cover damage at the replacement cost and can offer protection for increased rebuilding  costs due to changes in building codes. And, like a traditional homeowner policy, they can cover the property owner’s loss of use and additional living expenses.

Mortgage lenders sometimes require borrowers to have flood insurance, but there can be a sticking point when they require that coverage only to come from NFIP.  It is my hope that lending institutions will adapt and be receptive to accepting private flood insurance coverage in place of NFIP insurance, when the property owner can find better coverage in the private market.

Conversely, mortgage lenders don’t require earthquake insurance. However, that doesn’t mean homeowners and businesses should forego it. Washington State has the second-highest earthquake risk in the nation, estimated by FEMA to exceed $438 million. Scientists say it’s only a matter of time until a massive earthquake hits our state.

Despite the high level of risk, our 2018 survey of insurers found that fewer than 10% of homeowners in Washington have earthquake insurance.

The best way for property owners to find flood or earthquake insurance is to contact an insurance agent or broker. You can find a licensed agent or broker on our website at www.insurance.wa.gov