August flood victims struggle with insurance coverage

WEST ALLIS, Wis. — It’s been just over two months since historic flooding hit Wisconsin, particularly the southeastern part of the state. Many homeowners are on a tough and expensive road to recovery.

“Dirt, clay, everything went into our rec room in the basement, and we were down there minutes before it happened,” said West Allis homeowner Katy Thekan. “Our foundation repair alone was about $63,000.”

The McCarty Park neighborhood where Thekan lives in West Allis was hit especially hard.

“The whole wall caved in here,” Thekan said, pointing to her home’s foundation in her backyard. “45 feet of the wall caved in.”

Thekan has homeowners insurance through Badger Mutual. She has water/sewer backup coverage and sump pump failure coverage up to $10,000, which the insurance company paid her.

However, like the majority of Wisconsinites, Thekan does not have flood insurance. That means the rest of her home repairs are coming out of her own pocket.

“I explored every avenue when it came to the insurance,” she said. “I reached out to adjustors who live in Northern Wisconsin and everybody told me ‘Sorry, they’re not going to do anything, you don’t have flood insurance.’”

Thekan estimates that she’s spent between $80,000 and $100,000 to repair and replace what her family lost in the flood. Badger Mutual’s payout, along with the $22,000 Thekan received from FEMA, covers less than half of those costs.

“I still think it’s a trauma response where I’m blocking out that this has happened, but once I come down here and try to look for something that I owned, I don’t have it,” Thekan said, through tears. “I think the worst part was the bins for my son because those are memories and they’re gone.”

Representative Angelito Tenorio oversees Assembly District 14 and is a lifelong West Allis resident. He said calls and emails from constituents poured into his office by the dozens in the weeks after the flooding.

“People are seeking support because they’re getting denials from their insurance companies, or they’re not getting the coverage they need in order to rebuild and recover,” Rep. Tenorio said. “In West Allis, a lot of my constituents are getting denied because they don’t have flood insurance through their private insurance company.

“A lot of people, as I’ve been talking to folks, aren’t provided with the information early on when they sign up for homeowners insurance that anything related to flood is not going to be covered by the standard home insurance that people have,” he continued.

According to Wisconsin’s Office of the Commissioner of Insurance (OCI), very few Wisconsinites have flood insurance. In a state with a population of nearly six million, there are roughly 10,000 flood insurance policies through the National Flood Insurance Program (NFIP).  

“Flooding is one of Wisconsin’s number one climate risks, but because we don’t get hurricanes, because we don’t have the low-lying areas like Louisiana does, I think it does fly under the radar that flooding is a serious risk here,” said OCI Director of Public Affairs Sarah Smith.

“Most people think they can only get flood insurance if they live in a designated flood plain, as defined by FEMA, but that’s not the case,” Smith said.  “Nearly everyone in Wisconsin would be eligible to get flood insurance voluntarily whether they lived in a flood plain and were required by their lender to have, or if they just chose to get it.”

Smith added that 40% of NFIP claims come from outside of a FEMA-designated flood plain. She also said one inch of water can cause up to $25,000 in damages.

“In many of these cases, their insurance claim was probably denied appropriately,” Smith said.  “Their homeowner’s insurance doesn’t cover flood, generally, so those claim denials are, unfortunately, to be expected in many of these situations.”

FEMA requires proof of uninsured loss for those filing for FEMA assistance to help cover damages from the August floods. The deadline to apply is Nov. 12.

But not everyone can afford flood insurance, according to Representative Tenorio. In fact, FEMA has a section of bold text on its website, saying Why Flood Insurance is Getting More Expensive on Average. It continues to read:

“FEMA recognizes and shares concerns about the cost of flood insurance and how higher premiums can affect communities.”

“Estimates that I’ve heard and seen are over $1,000 annually,” Rep. Tenorio said. “Additional to homeowner’s insurance, additional to sump pump failure insurance, additional to auto insurance.”   

Tenorio said he is currently modeling legislation that would mandate upfront disclosures from insurance companies.

“So, when people are signing up for insurance, they know what they’re signing up for, what’s covered and what isn’t,” he said.  “I’m also working on legislation for how the state can work alongside our federal government and FEMA to make sure flood insurance is accessible and affordable.”

For Thekan, and dozens of others affected by the flood, the process of rebuilding is taken day by day.

“It’s bad,” she said, holding back tears. “It was bad, it was awful, but we’re going to get through it.”

Spectrum News reached out to Badger Mutual to get more information about what Thekan’s policy covers and the message the company has for people who are purchasing insurance, so they get the coverage they’re expecting. The company sent the following statement:

“Badger cannot comment generally about claims, because each depends on specific facts and applicable policy language. Badger abides by the terms of the applicable policy when adjusting a claim. Upon policy issuance and with each renewal offer, we encourage policyholders to read their policies and review them with their insurance agent to understand the coverages they purchase.”