(MoneyWatch) The severe weather this summer is taking a toll on homeowners and on the broader economy. Record flooding hit the Gulf Coast less than two weeks after Memorial Day, and hundreds of homes have already been destroyed. Now, a severe drought plagues most of the country, and countless crops have been lost.
But it's not just drought, or high winds and driving rainfall, that can cause problems. Storm-surge flooding can cause tons of damage well away from the country's coastlines, leaving destroyed homes, standing water and debris in its wake.
Storm surges occur when a hurricane moves across the ocean and acts as a plow, pushing water toward the coast at a high rate of speed. The water piles up in front of the storm, and as it moves close to shore the height of the water column rises and eventually spills out onto land, often moving inland via rivers and canals. When Hurricane Katrina hit New Orleans in 2005, storm surge was responsible for much of the destruction.
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According to real estate industry research firm CoreLogic, more than 4 million homes along the Atlantic and Gulf Coasts are at risk of storm-surge damage. That's more than $700 billion worth of property that could potentially be destroyed, and the bulk of it -- worth more than $500 billion -- is in the Atlantic Coast region.
"Damages caused by flooding are not covered by a typical homeowners insurance policies," warns Chantal Cyr, vice president of personal insurance at Travelers. "Obtaining a flood insurance policy is necessary to help cover damages caused by this peril. It is important to note that there is a 30-day waiting period for a flood insurance policy from the National Flood Insurance Program to take effect."
Florida, which has already seen devastating flooding this year, is the state with the most properties at risk of being damaged by a storm surge, according to CoreLogic. Some 1.4 million Florida homes are at risk, with potential damages of $188 billion.
Other states are at risk, too. "Though more frequently impacted states like Florida, Texas, and Louisiana get the most attention when it comes to hurricane vulnerability and destruction, Hurricane Irene made it very clear last summer that hurricane risk is not confined to the southern parts of the country," Dr. Howard Botts, vice president and director of database development for CoreLogic Spatial Solutions, said in a statement.
Hurricane Irene caused an estimated $6 billion in damage when it passed through New Jersey and New York City in the summer of 2011.
"That's why we felt it was important this year to highlight storm-surge risk in a brand new way to establish a better understanding of exposure throughout the states that are most at risk of a direct hurricane hit," Botts continued. "As we got a glimpse of during Irene, our 2012 report shows even a Category 1 storm could cause property damage in the billions along the northeastern Atlantic Coast and force major metropolitan areas to shut down or evacuate."
Another concern: Many of the homes that face potential storm-surge damage are located outside of areas around the country designated by the Federal Emergency Management Agency as flood zones. That means the homeowners are not required to carry flood insurance and, if they lack coverage, would have to foot the bill if a storm surge destroys their property.
In Virgnia Beach, Va., for example, 1,025 properties -- less than 1 percent of the homes exposed to flood or surge inundation -- are located in a FEMA flood zone. Homeowners in these areas are required to carry flood insurance. By comparison, roughly 252,000 homes -- more than 86 percent of at-risk properties -- are located in an area that could be potentially affected by storm surge. These homeowners are not required to carry flood insurance, yet run the risk of losing everything if a storm surge hits.
"It is important to understand that every property is in a flood zone," Cyr said. "While only those properties located in a special flood hazard area are required to purchase flood insurance if they have a federally backed mortgage, flood insurance is generally available on all properties. In fact, one-quarter to one-third of flood claims are paid on properties that are not located in high hazard zones."
Cyr tells homeowners that flood insurance can be purchased through insurance carriers that participate in the National Flood Insurance Program's Write Your Own Program.