Know the Facts: Flood Risk and Flood Insurance

Just how dangerous is a flood? How much damage could a little water actually cause? Why would I possibly need flood insurance?

These are all questions many property owners have likely asked themselves at one point or another – maybe when purchasing their property or perhaps while watching news footage of flood-ravaged neighborhoods. Too many home and business owners simply leave those questions unanswered – as just a passing thought. As a result, they are inadvertently leaving their properties vulnerable to the possibility of a catastrophic flood loss.

Property owners need to understand the very real, and potentially devastating, risk they are taking in not considering the facts. To help get the message across, we’ve compiled a list of credible facts and statistics to demonstrate the danger and assist property owners in making an informed decision about flood insurance. Beyond understanding the risks, it’s also crucial to know how to stay safe during a flood.

A Growing Problem

Floods are the leading cause of natural disaster losses in the United States; $155 billion+ in property damage since 2010.
Flooding is extremely common and occurs during 90 percent of U.S. natural disasters.
Floods are one of the most common and destructive natural disasters, responsible for up to 90 percent of all disaster-related damage, excluding droughts.
14.6 million properties across the country face substantial risk of flooding.

A Costly Mess

In an average-sized 2,000 square-foot home with possessions of $50,000, one inch of water could cost nearly $27,000, five inches of water $45,000+, and 48 inches of water more than $103,000.
In a large home of roughly 5,000 square feet with $100,000 in possessions, one inch of water could cost more than $53,000, while 48 inches of water could cost $200,000+.
Damage from Inland flooding cost the country $6.9 billion per year from 1976-2006 – averaging more annually than any other severe weather-related event.
Due to the effects of climate change, coastal flooding is projected to cost the world $14.2 trillion over the next 80 years.

Misunderstood Risk Exposure

Zero coverage for flooding is provided by standard homeowners and renters policies, which is also the case for most commercial property insurance policies.
A 2018 Insurance Industry Institute survey found that only 15 percent of American homeowners had a flood insurance policy.
FEMA disaster aid will not make a flood victim whole. After Hurricane Harvey, uninsured households in Texas that applied for FEMA Individual Assistance received an average payout of $4,400, providing only minimal relief compared to the extensive damages many faced. In contrast, individuals with FEMA flood insurance received significantly higher compensation, with an average payout of $118,000. This stark difference highlights the crucial role of flood insurance in financial recovery after a disaster, ensuring homeowners have the resources needed to rebuild.
5.9 million properties and property owners that are at risk of flooding do not fall in FEMA’s Special Flood Hazard Area (SFHA) and are unaware or severely underestimate their flood risk.
FEMA’s flood maps cover only 33 percent of stream miles and 46 percent of shorelines in the U.S.
Nearly two-thirds of FEMA flood maps have not been updated in the last five years, while some have not been updated in 40 years.

The Future of Flood Insurance

The private flood insurance market is growing as an alternative to the NFIP with direct premiums written of $522 million in 2019, up 45 percent from 2018.
Private flood insurers, including FloodPrice.com, offer policies with limits up to $5 million for maximum building coverage compared to $250,000 limits through the NFIP.
The maximum amount of contents coverage offered by private insurers is often double the amount available through the NFIP.
Waiting periods for policy inception through private flood insurers are typically 15 days, compared to 30 days through the NFIP.
110 million home listings on Realtor.com now include both publicly and privately assembled flood risk information to help inform property owners of their flood potential.

Disclaimer: The information on this site is provided for general guidance and informational purposes only. We make no guarantees regarding the completeness or reliability of the content. All liability for any reliance on the information is expressly disclaimed.