The Lesson Of Montecito


The Lesson Of Montecito

By: Adam Matheny

Southern California is a desert ecosystem. Most people living there access the the ocean, rivers, or lakes by bike, car, or bus. Why would they ever need flood insurance?

Because of the case of Montecito. The area not only suffered the tragedy of lost lives but also well over 100 homes and properties were destroyed or damaged by the mudslides that happened after the Thomas fire, a record-setting blaze.

Isn't This Covered By Homeowners Insurance?

Some might think that insurance for fire loss would cover these losses automatically but that is just not the case. Mudslide damage is excluded from most homeowners policies and is typically part of flood insurance. Many people in Montecito don’t carry flood coverage. Why would they? They never dreamed of flooding in their inland neighborhoods.

Homeowners who don’t think they can have a flood seldom purchase flood insurance as the coverage isn’t often required by lenders in non-flood plains. Private insurers do not like to offer flood insurance and it is most commonly obtained through the National Flood Insurance Program or NFIP. The NFIP is a federal program and, as such, is an eternal political issue and could be eliminated by Congress at any time. According to the NFIP, 20% of all NFIP claims are from people outside high-risk flood zones.


According to the NFIP, 20% of all NFIP claims are from homeowners outside of high-risk flood zones. If you lose a home to a flood, flood insurance is your best bet of being able to rebuild or to simply pay off your loan and move elsewhere. Standard homeowners insurance covers things like additional living expenses while a home is being repaired but flood insurance does not.

What Now?


There’s a saying that California has four seasons: earthquake, fire, mudslide, and drought. Montecito learned the truth of that little joke the hard way. Wildfires burn the vegetation that holds the soil to the hillsides and canyons, rain plus denuded soil brings mudslides, then insurance companies consider it a flood event because the mud is moved by water.

However, the high price of NFIP flood insurance seems disconnected to the probability of loss. The NFIP isn’t the only option for flood insurance, there are private flood insurance companies which can offer more coverage than the NFIP at better rates.

All we can do now is learn from this tragedy. California suffers more and bigger wildfires every year now and many California residents live downhill from a slope that, under the proper conditions, could bring a mudslide into their lives. Isn’t it time to think about flood insurance?

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