Less than 12 percent of American homeowners have flood insurance, the lowest number since 2010 and down from 14 percent in 2015, according to a survey by the Insurance Information Institute (I.I.I.). Furthermore, the number of people buying policies under the federal government’s National Flood Insurance Program (NFIP) has plunged by 549,000 – almost 10 percent – since 2009, even as coastal development surges, sea levels rise, and killer hurricanes become recurring events.
Misinformation is adding to the problems caused by short memories. More 40 percent of homeowners believe – erroneously – that standard homeowners insurance covers flood damage caused by heavy rain. In fact, standard homeowners and renters insurance will cover wind damage; flood coverage, however, is excluded and is available in the form of a separate policy from NFIP and a few private insurers.
“Hurricane Harvey has, once again, shown that tropical storm systems are often major rain events, rather than wind-related,” says Loretta Worters, vice president of media relations with the I.I.I.. “This brings strong motivation for everyone to consider flood insurance, even if their mortgage lender does not require it.”
The havoc Hurricane Harvey is currently wreaking on the Gulf Coast has stirred harrowing memories of 2012’s Hurricane Sandy for millions of New Yorkers. Many who did not have flood insurance policies applied for grants from the Federal Emergency Management Agency (FEMA), which helped pay for temporary housing, emergency home repairs, uninsured and underinsured personal property losses and medical, dental and funeral expenses associated with the disaster. FEMA does not pay to return a home to its pre-disaster condition. FEMA provides grants to qualified homeowners to repair damage not covered by insurance, but these grants may not pay for all the damage.
Meanwhile, the federal government has agreed to New York’s request to redraw the city’s flood zone maps, which will have major implications for flood insurance rates in low-lying areas.
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