As the floodwaters rise, few homeowners are financially prepared

Hurricane Ida is expected to go down as one of the costliest storms in U.S. history, with total property and economic losses approaching $100 billion. And for many homeowners who faced historic flooding, the toll will also be financial.

Well under 20% of U.S. homeowners have flood insurance, according to the Insurance Information Institute. That figure is especially alarming as climate change, which experts say is linked to an increase in the kind of extreme weather that devastated the Gulf Coast and Northeast this week, exposes millions more Americans to risk.  

Homeowners across the U.S. can expect to pay out $20 billion for flood damage this year, according to research from the nonprofit First Street Foundation. The dollar amount is about four times what Americans spent repairing flood damage in the 1980s, reflecting the impact of more erratic weather patterns driven by climate change.

"What we see time and again is floods don't know to stop at the lines we draw on a map," John Dickson, CEO of private flood insurer Aon Edge. "Ida traveled inland and didn't abate. It continued to drop rain, and you had flooding events transpire last night and into the morning in areas that are not known for flooding, including parts of New Jersey and New York City."

Homeowner's insurance typically covers damage caused by high winds or trees that might have fallen on a structure's roof. Flooding is not usually covered. Only if a home's roof is torn off, allowing rain to pour in, would a home insurance policy typically cover damage. 

"Only if you have a specific flood insurance policy will it cover flood-related losses," said Loretta Worters, vice president of the Insurance Information Institute, which represents insurers.

Travelers, a provider of homeowners insurance, makes clear that it covers policyholders' property and possessions in the event they're threatened by a fire, theft or severe weather including windstorms, hail, lightning, ice, snow and sleet. It does not cover damage caused by floods or earthquakes. 

"We always encourage people to look into flood insurance well before disasters like what happened last night happen. On our home insurance cover page, we make sure we're clear these types of floods are not covered under those policies and people should look into a separate flood policy whether they are near the coast or not," a Travelers spokesperson told CBS MoneyWatch. 

Most flood insurance policies are provided through the National Flood Insurance Program (NFIP), managed by Federal Emergency Management Agency. There are also private insurers with policies offering greater coverage, typically topping out at $250,000 for residential buildings. 

Homeowners with flood policies should be ready to file a claim well before a storm hits, Dickson said. "We counsel people that the best time to prepare for the flood is not when the water is up at the doorstep. The time to prepare is when the sun is out. Take inventory of your possessions when the sun is shining, and make sure your insurance coverage is complete and you know what's covered and what's not."

After a storm, survey the damage and take pictures of both the interior and exterior of the home to show your adjuster.

Claims related to Ida are already pouring in, Dickson added. "We've had several hundred claims and we're seeing batches of 25-50 claims an hour," he said. "We've been writing private flood insurance for the better part of six years, and this will generate more claims for us than any previous event in our history."

FEMA also provides steps NFIP policy holders can follow when filing a flood claim. They start with immediately reporting your loss to your insurer. 

And what if you don't have flood coverage? The hard truth is you may be out of luck, although federal grant and loan programs administered by FEMA and the Small Business Administration can help some some homeowners defray the costs.

The bottom line: The only way to be fully protected against damage from flooding is to hold an insurance policy, which typically takes 30 days to take effect. Individuals may not purchase flood insurance retroactively after the damage is done.

"It would be like insuring a burning building. It wouldn't make good business sense to do that. They'd automatically be paying out for a loss," Worters said.