The Most Expensive Mistake 75% of Homeowners Are Still Making

As I write this, I’m reflecting on a critical decision I made this time last year – NOT purchasing flood insurance for my own home because I don’t live in a designated flood zone.

That decision was maybe a lucky one, and one that I’m doing differently this year.

The Sobering Reality: 2024 by the Numbers

The statistics from Hurricanes Helene and Milton tell a devastating story that every Florida homeowner needs to hear:

🌀Hurricane Helene:

• Generated over 55,000 National Flood Insurance Program (NFIP) claims
• Projected losses between $6-7 billion in flood damage alone
• Caused widespread flooding far outside traditional flood zones

🌀Hurricane Milton:

• Resulted in more than 18,000 flood insurance claims
• Projected losses of $1.5-2.5 billion
• Combined with Helene, the two storms generated over 78,000 flood claims

‼️The Most Shocking Statistic: In the hardest-hit areas of Florida, no more than 25% of residents had flood insurance before these storms struck. This means 75% of homeowners faced flood damage with zero coverage.

I know many people, and I’m sure you do too, who lost homes and businesses, who thought they were covered.

The Flood Zone Myth That’s Costing Homeowners Millions

Here’s what I learned researching flood insurance for my own property: 40% of all NFIP flood claims come from outside high-risk flood zones. Let that sink in – nearly half of all flood insurance payouts go to homeowners who thought they were “safe.”

My Personal Insurance Journey: Lessons Learned

Like many Floridians, I had been putting off flood insurance. My home isn’t in a flood zone, I reasoned. I have good homeowners insurance. I’ll be fine.

Then I started really diving into the data for my clients, and I realized I was making the same mistake I counsel them against: assuming someone else has done the risk assessment for me.

Here’s what I did this year:

1. Purchased flood insurance – Even though my mortgage doesn’t require it, and I’m not in a flood zone. The peace of mind makes it worth every penny. Full transparency, it cost me $598!

2. Invested in hurricane-proof windows – This wasn’t just about safety (though that’s paramount). It is about capturing the energy efficient home improvement tax deduction that’s expiring this year, the energy efficiency that I hope will reduce my electric bill by ~20%, and possibly a premium decrease from my homeowner’s insurance, all of which I hope will pay for the windows over time.

Beyond Homeowners Insurance: The Complete Coverage Picture

Auto Insurance and Flooding: Your car can be totaled in a flood, and only comprehensive coverage will protect you. During Milton and Helene, countless vehicles were damaged by flooding, including many parked in areas owners thought were safe. If you’re financing your vehicle, comprehensive coverage is usually required, but if you own your car outright, don’t skip this coverage.

Renters Insurance: Renters, you’re not off the hook. Your landlord’s insurance covers the building, not your personal belongings. A standard renters policy typically excludes flood damage, so you’ll need separate flood insurance for your personal property. At around $200-400 annually, it’s one of the best investments you can make.

Commercial and Investment Properties: If you own rental properties or run a business, flood insurance becomes even more critical. Business interruption due to flooding isn’t covered by standard policies, and neither is flood damage to your building or inventory.

Common Misconceptions:

• “My homeowners insurance covers flooding” – It doesn’t
• “I’m not in a flood zone, so I don’t need it” – 40% of claims come from outside flood zones
• “It’s too expensive” – Policies outside flood zones can cost as little as $400-600 annually
• “FEMA will help me” – FEMA assistance is typically loans, not grants, and the maximum is often insufficient

Taking Action: Your Next Steps

Based on my professional experience and personal journey, here’s what I recommend:

1. Get a flood insurance quote immediately – Even if you don’t buy right away, know your options and costs.

2. Review all your insurance coverage annually – Auto, homeowners, renters, umbrella. Treat it like an annual financial physical.

3. Consider mitigation improvements – Hurricane shutters, impact windows, proper drainage, and tree trimming (still on my list for this year). Many offer insurance discounts that improve your ROI.

4. Build an emergency fund – Insurance covers property, but you need cash flow for displacement costs, deductibles, and uncovered expenses.

5. Document everything – Take photos/video of your property and belongings now, store them in the cloud.

The Bottom Line

Hurricanes Helene and Milton weren’t just weather events – they were financial disasters that exposed critical gaps in how we think about insurance coverage in Florida. The homeowners who weathered these storms best weren’t necessarily those with the strongest houses, but those who were the most prepared.

As your financial planner, I’ve seen too many families’ financial plans destroyed by a single uninsured event. Don’t let that be you. The cost of flood insurance is a fraction of what you’ll pay for a single flood event, and in Florida, it’s not a matter of if we’ll see more major storms, but when.

Ready to Review Your Coverage?

If you’d like to discuss your specific insurance needs and how they fit into your overall financial plan, I’m here to help. I don’t sell insurance, but I’m here to help you see the gaps in yours. As we’ve learned from 2024, proper insurance isn’t just about protecting property – it’s about protecting your family’s financial future.

Let’s connect!

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Stacy Miller, CFP® is an investment adviser representative of BayView Financial  Planning. The firm is a registered investment adviser and only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. 

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