US Economy

California's El Nino floods keep roofers, insurers busy

El Nino rains down on business
VIDEO2:0902:09
El Nino rains down on business

It's finally here, and it's making a mess.

After years of drought, the first El Nino storms of the season moved through California this week, and John Wolf isn't getting much sleep. "We are really busy," said the supervisor for CI Services Roofing, a 21-year-old company that specializes in commercial properties. Wolf was supervising eight crews at various locations, patching leaks in the pouring rain. Owner Bill Baley said that a year ago, his crews could have responded to requests for estimates within one week. Now they're booked through the end of February.

"That's our sold work," Wolf said as he and his crew worked quickly on the roof of a strip mall in the city of Yorba Linda. The job was an extra, one of many emergencies they were squeezing in. "With this rain, we're just gonna get phenomenally tore up here working," he said. "It's gonna be busy, busy, busy."

When it rains, it pours, in more ways than one.

Homeowners and renters up and down California are signing up for flood insurance for the first time. Between September and November, more than 28,000 new flood insurance policies were purchased in California, a 12 percent jump. Farmers Insurance saw a 1,200 percent increase.

"This is the largest jump that we've seen in at least 10 years," said Janet Ruiz of the Insurance Information Institute. Flood insurance premiums go into a federal pool administered by the Federal Emergency Management Agency. FEMA Deputy Regional Manager Ahsha Tribble said she expects to see the number of new policies rise further as December figures come in. "It really shows that Californians are taking this El Nino and flood threat very seriously," she said.

Vehicles drive on the flooded Freeway 5 after an El Niño-strengthened storm brought rain to Los Angeles on Jan. 6, 2016.
Lucy Nicholson | Reuters

Regular homeowner policies cover damage only from water raining down from above, not rising from the ground. Hence the need for flood insurance, which Ruiz said about half of all Californians have (many lenders require homeowners to have flood policies based on their location). Flood insurance will also cover mud that flows in with the water, but it doesn't cover landslides. Coverage does not kick in until 30 days after purchase.

This reporter bought flood insurance for the first time this week through my insurer, USAA. First I logged onto floodsmart.gov to get some idea of how much a one-year policy could cost. In my case, premiums ranged from $162 for a few thousand dollars in damage to $430 for maximum coverage, which also carried deductibles totaling $2,500.

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The number of policies varies widely from city to city. As of the end of October, there were more than 42,000 flood insurance policies in Sacramento, but only 64 in San Francisco. Is Sacramento so much more flood prone?

Ruiz answered that it may not matter. "More than 20 percent of claims come in from low to moderate flood risk, so it's very important that people pay attention and get the insurance even if they're not in a high-risk area."