Inland flooding poses an extremely high risk to homes and businesses both on and off the floodplain. It can last for days or weeks, and even a few inches of water can potentially cause extensive losses to buildings and their contents.
You can often manage flood risk in a variety of ways. At the most basic level, insurers typically determine if a property is located on a floodplain. More sophisticated risk management techniques may use catastrophe modeling to develop underwriting rules based on the location and characteristics of the property. Any insurer with a portfolio of properties exposed to flood risk should manage that risk effectively.
There are other factors, known as secondary risk characteristics, that can significantly affect a building’s resistance to flood damage and can have a major impact on loss potential. Insurers should account for those characteristics as well when seeking to understand and manage flood risk.
To learn more about managing flood risk, read my recent article on the subject. The article examines some secondary risk characteristics and the effect they can have on a property’s flood risk.Flood-damaged appliances and furniture in Waverly, Iowa, after the 2008 Midwest flood. Photo credit: Patsy Lynch/FEMA.