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Midwest derecho highlights gaps between wind and flood coverage
Despite widespread wind coverage under standard policies, flood losses after the August 11 storm may not be covered, with research estimating uninsured residential flood losses could top $1 trillion in a high-severity scenario.
A derecho struck the US Midwest on August 11, killing at least two people and knocking out power to nearly one million customers across Illinois, Indiana, Ohio, and Kentucky, with flood warnings running through Friday. With Ohio Valley ground already saturated, the claims picture extends beyond storm wind damage, according to Insurance Business.
In the affected states, standard homeowners' and commercial property policies typically cover wind and hail, but the flooding that follows is handled under separate flood coverage. Ohio Governor Mike DeWine warned that flooding would persist well after the storms cleared, while research cited by Insurance Business shows only about 4% of US homeowners carry flood insurance, even though flooding drives billions in annual losses.
Insurance Business also points to federal and industry data indicating many at-risk properties lack flood insurance, including communities outside federally designated flood hazard zones where mandatory purchase requirements may not apply. A Moody's analysis from May 2026 found uninsured residential flood losses could exceed $1 trillion in a high-severity scenario, and a Federal Reserve Bank of Philadelphia study estimated that about 70% of roughly $24.4 billion in annual flood damage to US single-family homes goes uninsured.
For commercial clients, the large outage footprint creates additional issues, since losses for cold storage operators, food producers, and manufacturers can depend on specific utility service interruption language and how long power is out. Insurance Business notes that peak outage impacts reached nearly one million customers, while the National Weather Service issued a Level 3 of 4 flood threat through early Friday.