Flood insurance is for everyone

Most homeowners don’t have flood insurance. Part of that problem is misconception: many homeowners don’t realize their home insurance policy excludes flood coverage. For others, they aren’t required by federally regulated lenders to carry it, so they don’t.

But the reason most people don’t have flood insurance? They drastically underestimate their own risk of flooding – to their detriment.

So let us be the first to address the question, “Do I need flood insurance?”

Everyone needs flood insurance. And this is why.

A standard home insurance policy isn’t enough

A basic home insurance policy can cover some types of water damage, but it doesn’t cover flood damage caused by storm surge. You have to add flood insurance to your coverage or purchase it as a separate policy. Unfortunately, many homeowners think homeowners insurance covers flood damage.

And that misconception has consequences. According to a 2020 poll by the Insurance Information Institute, only 27% of American homeowners have flood insurance .

More disconcerting is that the coastal homeowners who arguably need flood protection the most also lack protection. In 2017, McKinsey & Company found about 60% of Florida homeowners don’t have flood insurance despite having front-row seats to the impact hurricanes can have when they make landfall.

Please note, home policies, including homeowners insurance in Florida, do have hurricane insurance. However, it covers wind damage, not damage caused by storm surge.

Floods can happen anywhere – yes, anywhere

As the Federal Emergency Management Agency (FEMA) famously noted, “Anywhere it can rain, it can flood.” That’s because it’s not proximity to the coastline or bodies of water alone that determine whether your area can flood. Depending on how your city or county manages waterways (think: dams, levees, and reservoirs) and the changes made to the land, your region may be one that faces flooding from prolonged rain, storm surge, or sudden snowmelt. If infrastructure isn’t well-maintained, urban flooding can be a big risk.

Florida in particular is more at risk for floods than any other state, in part because it has 11,000 miles of rivers, streams, and waterways. But its flat terrain and urbanization (pavements and other impenetrable surfaces that impede natural drainage systems) further increase its flood risk. Plus, it experiences an average of 53.7 inches of rainfall per year.

Still not sure if flood insurance is for you? These facts about floods may change your mind:

• One inch of water can cause $25,000 or more in damage to your home.
• More than 1.2 million single-family homes risk flooding from storm surge in a category 1 hurricane; that number jumps to over 7.5 million in a category 5.
• The National Oceanic and Atmospheric Administration (NOAA) says flooding can happen within minutes .

Federal flood maps are inaccurate

To be fair, FEMA has a lot on its plate. It has the nearly impossible task of keeping flood hazard maps up to date for more than 22,000 communities, and it is the first to admit what a challenge that is . Though FEMA is supposed to update its maps every five years, nearly two-thirds of flood maps haven’t been updated in that time. Some maps haven’t been updated in more than 40 years.

Many homeowners only purchase flood insurance if they live in a high-risk flood zone or Special Flood Hazard Areas (SFHAs), have a federally-backed mortgage, and are therefore required to have flood insurance. But if homeowners rely solely on these mandates or federal maps to inform whether or not they have flood insurance, they may put themselves at serious risk.

Take Hurricane Harvey for example. The hurricane damaged more than 204,000 Houston homes, most of which were outside the federally regulated 100-year floodplain. More than 80% of these homeowners didn’t have flood insurance.

When is flood insurance required: A growing need

As our planet gets warmer and sea levels rise, flooding will only get worse. In fact, climate change contributes to four key factors that increase flood risk:

1. Heavier precipitation. A warmer atmosphere holds more water, and that means heavier rains. Experts have seen an increase in global precipitation and precipitation in the contiguous 48 states by +0.02 inches per year from 1901 to 2020. This trend is expected to grow. As you might’ve guessed, heavier rainfall increases the likelihood of floods.
2. More snowmelt. Rising temperatures also lead to faster and earlier snowmelts, which can cause an uptick in spring flooding. Winter and spring soil is too frozen or wet to absorb the snow and rain runoff from rivers, which means higher flood risk.
3. Frequent hurricanes. Ida. Irma. Maria. Harvey. Florence. Michael. In just the past few years alone, we’ve witnessed the catastrophic might of hurricanes, and climate change will only increase their frequency. Climate scientists predict an increase in the frequency of category 4 and 5 hurricanes in the Atlantic Basin with 10 to 15 percent more precipitation. And stronger storms bring greater rains, stronger winds, and stronger storm surges.
4. Higher seas. Rising ocean temperatures, which melt glaciers and ice sheets, cause sea levels to rise around the world. Not to bring you down or anything, but our oceans have already risen seven to eight inches since 1900. NOAA predicts the global sea level will rise at least 12 inches by 2100 on a low-emissions pathway and 8.2 feet if nothing changes. Higher seas increase high-tide flooding, which has already doubled in the last 30 years, and increases opportunities for storm surges.

Flooding is super expensive

To cover flood losses from 2007 to 2017, the National Flood Insurance Program (NFIP) shelled out $77 million in claims from Hurricane Ida in 2021. While this is much less than was paid for events like Hurricanes Harvey or Katrina, it’s still a lot of losses for a smaller event.

Let’s break that down even further. For individual homeowners, the national average flood claim payout was $52,000 in 2019, according to FEMA. For Florida homeowners specifically, the average flood claim payout was around $29,000 . And in late 2021, FEMA announced changes to its rating system that caused flood insurance rate increases for many homeowners.

Now imagine facing a $29,000 repair bill without insurance. For many families, that is an impossible sum of money. They would lose their home.

That’s the real reason flood insurance is for everyone. No one should be left without the means to rebuild their lives after a disaster.

Editor’s note: This post was originally published in February 2020. It has been updated for accuracy and comprehensiveness.