Colorado floods: Costly and often uninsured

  @CNNMoney September 19, 2013: 7:22 AM ET
colorado flood damage

Much of the damages to homes and businesses from Colorado flooding could be uninsured, according to experts.


The recent severe floods in Colorado could end up costing homeowners, businesses and local governments nearly $2 billion, according to Eqecat, a firm that conducts loss estimates for the insurance industry.

But unlike many other natural disasters, the firm and an insurance trade group agree that a high percentage of the losses will not be covered by insurance.

Eqecat estimates that the storm cost homeowners about $900 million in both damage and expenses associated with evacuations. Businesses and local governments are likely to be hit with an additional $1 billion in costs.

Related: CNN's coverage of Colorado flooding

Flood damage is not covered by private insurers. Instead, it is covered by the National Flood Insurance Program (NFIP), part of the Federal Emergency Management Agency. But Tom Larsen, senior vice president of of Eqecat, said that because very many of the homes damaged by the flooding are not in flood plains, the number of people with flood coverage is very low.

"NFIP is usually only taken when it's mandatory by a mortgage lender," he said. "In coastal areas, which are susceptible to hurricanes, there's a high concentration. That's why the payout from those storms is so much greater. But the percentage of insurance in this one is going to be a very low number."

Mike Barry, spokesman for the Insurance Information Institute, agrees with Larsen's estimate about how few homeowners and businesses affected by the disaster are covered by flood insurance. And he said local governments generally do not have coverage either.

Related: Colorado flooding may unleash fracking fluid

The Institute's listings of the most expensive disasters shows the NFIP paid a record $16.3 billion in claims for Hurricane Katrina in 2005, and $7.1 billion last year for Superstorm Sandy.

Barry said even without insurance, homeowners and businesses in disaster areas will be eligible for federal help, including grants and low-interest loans from the Small Business Administration. Local governments may also be able to get some assistance from Washington once it is approved by Congress. Already, the Department of Transportation has committed $35 million to Colorado for road and bridge repairs. To top of page

Join the Conversation
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.26%4.48%
15 yr fixed3.30%3.31%
5/1 ARM3.30%3.35%
30 yr refi4.25%4.45%
15 yr refi3.29%3.34%
View rates in your area
Find personalized rates:
Rate data provided
CNNMoney Sponsors
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.