Many Homeowners Don’t Have Flood Insurance: How to Educate Clients

Federal flood maps are not as accurate as they should be, and as a result, many uninsured homeowners are unaware that they live in areas susceptible to flooding and that they need to be insured.

Only about four percent of homeowners in the United States have flood insurance. A major reason for this is inaccuracies in flood maps created by the Federal Emergency Management Agency (FEMA).

FEMA maps show areas that are considered flood zones. They are the places most likely to experience a 100-year flood event. Most mortgages that are backed by the federal government require homeowners who live in these areas to get flood insurance. But outside of these areas, flood insurance isn’t required

However, many low-lying areas outside the flood zones are vulnerable to flooding as well. In fact, some research has shown that almost twice as many properties are vulnerable to 100-year flooding than is shown on the maps.

Another university study showed that the FEMA flood maps underestimate flood risk by almost 800,000 square miles.

Raising Awareness

FEMA officials have said that homeowners who live beyond the designated flood zones should also consider whether they need flood insurance because flooding happens outside of the high-risk areas. Agency officials have said that they are in the process of changing designations from a simple in-or-out boundary for flood zones to a more graduated scale that property owners may be able to use to measure flood risk.

Some are also calling for flood-prone states like Florida to require all property insurance policyholders in the state to also buy flood insurance. Texas has such a program, although it is only for those properties in the highest-risk flood areas.

Some private carriers are advocating for a rule that would enable federally-backed mortgages to accept private flood insurance. This could also increase the affordability of policies. Other people have argued that the federal government should simply offer flood insurance for all mortgages at no charge.

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