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Texas Wildfires Paradoxically Create Greater Need for Flood Insurance

According to the Insurance Council of Texas, the wildfire that destroyed 1,673 homes while laying barren 33,000 acres around Bastrop Texas, in September 2012 will likely result in $325 million in insured losses, making it the most costly wildfire in the state’s history. About half of the claims have been settled and some residents are already rebuilding. They are doing so, however, on a dramatically changed landscape that may make new insurance costs part of the price of starting over.

After Fires Flood Insurance a Must

Officials say that about 3,080 residents of the small community 30 miles to the south and east of Austin have applied for Federal Emergency Management Agency assistance totaling $9.4 million to date in relief funds including housing. Currently about 52 FEMA trailers are being used by dislocated families who have not been able to find other living arrangements. At the same time that FEMA is helping the community address housing concerns, officials are also saying residents around Bastrop and in other hard-hit Texas communities should consider purchasing flood insurance even if they don’t live in a high-risk area. Total insured losses in the state over the entire wildfire season have exceeded $500 million, far in excess of the previous record set in 2009 at $115 million.

Damaged Land Now Susceptible to Flash Flooding

The fires have stripped the land of trees and other vegetation that provide a healthy system of roots to soak up rainwater. When storms do come, the resulting runoff will cause flash flooding, with attendant erosion and mudslides. These dangers will not only affect the areas that burned, but also the areas downstream. Flooding is actually the most common natural disaster in the U.S., but few homeowners have separate flood policies, which they need. Standard homeowners policies do not cover catastrophic flooding. In the drought-plagued states of the southwest, homeowners near rivers often have flood policies, but the wildfires have spread the potential range of this natural danger.

About 1,000 communities in Texas are eligible to participate in the National Flood Insurance Program. Texans can investigate flood insurance options with their regular insurance agent, or they can check their eligibility for NFIP coverage at Since the wildfires have changed the character of the landscape in affected areas for years to come, flood insurance will be a necessary part of comprehensive homeowners coverage in Texas for many people for the first time. Although climatologists say it may be 2014 before the drought in the state really “breaks,” the more damaged the land becomes, the greater the danger of catastrophic flash flooding from any significant rain.

Historically, this scenario is verifiable. Texas and the Southwest suffered a seven-year drought from 1950 to 1957. The week before the drought broke, Texas was receiving massive amounts of drought-related aid including emergency feed for livestock. One week after the rains started, the counties along the Red River and other significant waterways in Texas were declared flood disaster areas. Fifty years later, many of the large ranches in Texas have been broken up and summer and retirement homes dot the banks of the state’s rivers. The potential for even greater insured losses from floods is real, and could leave a whole new segment of homeowners as devastated as those who lost their residences in the wildfires.

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