Fact.

Insurance is critically important for homeowners to protect their property.

Also fact: it’s one of the least understood financial products when it comes to flood management.

Here’s why.

Right now, homeowners generally have access to two types of insurance.

First, there’s FEMA (Federal Emergency Management Agency) flood insurance. This federal flood insurance can cover the contents of your home, the structure itself, or both.

And it maxes out at $250,000.

Then there’s homeowner’s insurance. This generally insures your home against wind, fire and other types of peril not water related.

There are some third-party insurance products that homeowners can pick up from additional companies to fill the gap of what’s covered and the value of homes and property, but often those insurance products are expensive and not utilized properly in the flood mitigation space.

If affordability is challenge number one, challenge number two is getting insurance on all the elements that make up a home along the waterfront.

Think septic systems as an example.

Outside of purchasing a home and car, the next largest investment homeowners make are generally engineered septic systems, which can cost anywhere from $25,000 to $70,000.

Imagine spendings tens of thousands of dollars on a septic system and six months after installation a tropical depression comes through and the entire system – including the electronic components – are underwater for hours. Unless the system is sealed, things like this do not do well when mixed with saltwater.

Traditional insurance products noted above don’t cover items like this.

Coastal property and homeowner need more insurance products and solutions to mitigate these challenges.

Two words.

Parametric insurance.

Parametric insurance is an emerging type of insurance that has been utilized in the Gulf region to insure things like coral reefs.

Fight the Flood staff started asking questions.

If you can insure a coral reef, can we insure a living shoreline?

If you can insure a coral reef, can you insure a pier?

The answer?

You can insure anything that you want with parametric insurance.

Parametric insurance is unlike any other type of insurance.

With normal insurance is, you insure an asset. If the asset is damaged, you have to report the damage, the damage is evaluated, the value is established and then you get a check for it.

Parametric insurance insures against the likelihood of the event happening.

Think of it like this. You can put a $50,000 Parametric insurance policy on your $50,000 septic system. The Parametric Insurance company is gambling that that unit will not be flooded. If the floodwaters trigger or trip whatever the predetermined level is, your payout is automatic.

This unique insurance product will allow homeowners to insure assets using a premium structure that will help them remain financially whole against these really expensive assets that are not currently insurable.

Because the market of insurance will continue to shift and change over time, Fight the Flood is bringing as many different companies offering as many different types of insurance as possible into the Middle Peninsula space to work with homeowners.

That includes these parametric insurance companies.

It also includes working to insure living shoreline nature-based solutions installed and helping homeowners optimize their homes to help reduce their insurance premiums.

At the end of the day, Fight the Flood wants to make the Middle Peninsula the most resilient community on the eastern seaboard, and to be able to do that, Fight the Flood needs to offer provide solutions including financial and insurance products that will make people want to live here because they feel safe.