{"id":13644,"date":"2018-09-14T21:31:04","date_gmt":"2018-09-14T21:31:04","guid":{"rendered":"http:\/\/www.lifeandnews.com\/articles\/?p=13644"},"modified":"2018-09-14T21:31:04","modified_gmt":"2018-09-14T21:31:04","slug":"what-is-flood-insurance-and-why-the-system-is-broken-6-questions-answered","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/what-is-flood-insurance-and-why-the-system-is-broken-6-questions-answered\/","title":{"rendered":"What is flood insurance and why the system is broken: 6 questions answered"},"content":{"rendered":"

Robert W. Klein<\/a>, Georgia State University<\/a><\/em><\/span><\/p>\n

Editor\u2019s note: Homeowners generally rely on insurance provided by the federal government to cover the costs of rebuilding their lives after a flood. We asked an insurance expert to explain the government program and its challenges.<\/em><\/p>\n

1. What is flood insurance?<\/h2>\n

Homeowners\u2019 insurance does not cover damage to a home caused by flooding. A homeowner must have a separate policy to cover flood-related losses, defined as water traveling along or under the ground.<\/p>\n

Most such policies are underwritten by the National Flood Insurance Program<\/a>, which is part of the Federal Emergency Management Agency. The program was established in 1968 to address the lack of availability of flood insurance in the private market and reduce demand for federal disaster assistance. It also contains provisions<\/a> intended to reduce flood risk.<\/p>\n

The National Flood Insurance Program\u2019s activities are funded largely by the premiums and fees paid by its policyholders, supplemented by a little from the federal budget to help pay for flood risk mapping. Because the program serves the public interest, some<\/a> believe that more of its funding for flood risk management should be borne by taxpayers. <\/p>\n

Homeowners can purchase a federal flood policy directly from the program or through a private insurer. Separately, some private insurers sell their own flood policies on a limited basis for properties that are overcharged by the government\u2019s program.<\/p>\n

2. How many homeowners have flood insurance?<\/h2>\n

It is difficult to determine exactly how many homeowners have flood insurance. <\/p>\n

The National Flood Insurance Program had just over 5 million policies in force<\/a> as of May 31. Of these policies, approximately 69 percent were on single-family homes and 21 percent on condo units. There is no source on how many private flood policies are in force, but my sense is that it is comparatively small.<\/p>\n

In recent years, the number of such policies has been dropping across the country over concerns about the cost and an underestimation of the risks. Some of the counties hardest hit by Hurricane Harvey in 2017, for example, such as Harris (which includes Houston), have experienced significant declines<\/a>. <\/p>\n

A more revealing \u2013 and more difficult to ascertain<\/a> \u2013 stat is the share of homeowners in a disaster area who actually have flood insurance. In Harris County, for example, experts estimate<\/a> that only about 15 percent of homeowners were insured for floods \u2013 though the percentage is likely higher in areas near coastlines.<\/p>\n

Real estate data company CoreLogic<\/a> estimated that approximately 75 percent of flood losses from Harvey were uninsured, a figure that rises to about 80 percent for Hurricane Irma.<\/p>\n