Many Enlist, But Flood Coverage Still Falls Short

Photo from Hurricane Irma aftermath in Collier County

Even as flood water continue to sit in living rooms and kitchens across a large swath of North Carolina it is clear that most of those homes are not insured against the damage. Mary Williams Walsh, writing in the New York Times, says that in North Carolina and South Carolina, which suffered less widespread damage, only about 335,000 homes in total have flood insurance.

The Urban Institute (UI) reports that the number of policies homeowners purchased through the National Flood Insurance Program (NIP) has declined over the last ten years and the total is now just over 5 million nationwide. There are also some private insurance policies, but nowhere near enough to cover the affected homes.

The AHS asked survey respondents whether they carried insurance and if so whether it was because it was required, they bought it after a neighbor did, or some other reason. The last two answers were counted as voluntary purchases. Of all homeowners who had a flood insurance policy in 2017, 60 percent chose to buy it on their own; 40 percent were required to do so by their mortgage lender. Homeowners who live in Federal Emergency Management Agency (FEMA) designated flood plains are required to carry insurance if their mortgages are guaranteed by Fannie Mae, Freddie Mac, FHA or the VA.

Newer homes are more likely to be insured than older homes and also more likely to do so on a voluntary basis. Flood insurance coverage increases from about 11 percent for homes built in the 1980s with 59 percent purchased voluntarily to 14 percent and 64 percent for homes built since 2010. The authors say this trend may mean that owners of newly built homes, which are generally more expensive than existing homes, are more aware of the possibility of flooding and are looking to protect their investment.

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