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Most NC Homeowners Lack Flood Insurance

A houses is surrounded by water as Hurricane Irma passes through Naples, Fla., Sunday, Sept. 10, 2017.
David Goldman
A houses is surrounded by water as Hurricane Irma passes through Naples, Fla., Sunday, Sept. 10, 2017.

Even as Hurricane Irma pummeled the Florida coast and Texans began to rebuild after Hurricane Harvey, more North Carolinians stare potential financial disaster right in the face.The number of active flood insurance policies in North Carolina has decreased 6 percent since 2012, according to data from the National Flood Insurance Program (NFIP).

Even some homes on properties designated as hazard areas don’t carry flood insurance. In some coastal counties, as many as 60 percent of homes in hazard areas aren't protected by flood insurance.

The interactive maps below show the percentage of properties without flood insurance and the percentage of properties within hazard zones without flood insurance. For counties not shown, the percentage of homes without flood insurance is higher than 98 percent, and the percentage of homes in hazard areas without flood insurance is above 80 percent.

Not having insurance put owners on the hook for expenses in rehabilitating a flooded home. Even if federal aid money is provided, it can often take much longer to trickle down to homeowners, delaying recoveries from flooding.

There are fewer flood insurance policies in North Carolina in 2017 than there were in 2012.
Credit National Flood Insurance Program
There are fewer flood insurance policies in North Carolina in 2017 than there were in 2012.

Across the state, very few residents carry flood insurance.

In 61 of the state's 100 counties, fewer than 1 percent of properties are covered by flood insurance. In only 13 counties does coverage exceed 10 percent of all properties.

"A lot of times people will think they don't need flood insurance because they don't live in a flood zone. And that's not true," said Michelle Osborne, chief deputy commissioner of insurance with the N.C. Department of Insurance. "In my opinion, pretty much everyone is at risk."

A National Trend

North Carolina isn't alone when it comes to homeowners eschewing flood insurance policies, according to an analysis by the Associated Press. Since 2012, the number of properties covered under the flood insurance program has dropped 10 percent, from nearly 5.5 million to about 4.9 million. This is as the program has struggled financially to cover increasing amounts of losses from increasingly frequent flooding events.

In Texas, for example, President Trump has asked Congress for nearly $8 billion in aid.

Experts say there are multiple factors that contributed to the decline in flood insurance coverage. One likely culprit is the increase in premiums. In North Carolina, 26 different counties saw a more than 25 percent average premium increase from 2012 to 2017, and 17 counties saw their annual premiums increase by $200 or more. In 2017, some 15 counties had an average flood insurance annual premium of more than $1,000, compared to just five such counties in 2012.

Experts contacted by the Associated Press offered other theories as to why flood insurance coverage has declined:

  • Banks may require insurance to originate a loan, but as lenders resell mortgages, enforcement of flood insurance requirements may become lax, allowing owners to let their policies lapse
  • Small amounts of private insurance offerings in some areas could have slightly reduced the numbers in NFIP
  • Homeowners not in federally designated Hazard Zones for flooding have largely shunned obtaining flood insurance despite the fact that the hazard zones don't take into account overtaxed storm drains, surface water traveling to a drain and other flooding risks. Although lenders typically require flood insurance on mortgaged properties within these zones, once the mortgage is paid off, homeowners may decide to eliminate the expense.

Nearly all flood insurance is bought through the National Flood Insurance Program (NFIP), which is subsidized by the federal taxpayer. Because of major storms like Katrina, Sandy and Matthew, the NFIP is $25 billion in debt to the government.

A look at the National Flood Insurance Program through the years.
Credit National Flood Insurance Program
A look at the National Flood Insurance Program through the years.

The combination of climate change, overdevelopment and outdated flood zone maps lead many experts to predict that storms will become stronger, more frequent and cause more damage in the coming years.

Critics of the NFIP include Orrin Pilkey, a professor of earth and ocean sciences in the Duke University Nicholas School of the Environment. He argues that at the very least, the program should not be subsidized. "We the citizenry of this country are in many cases paying for the risk that people take in living in dangerous places, such as along shore lines and so forth," he said. "We have to start thinking in terms of raising the cost of flood insurance. Flood insurance should be actuarial. That is, it should pay for itself. We should not be losing money every year on flood insurance."

That's especially true, he said, because flood insurance for coastal properties generally covers those with high incomes who in many cases have the insurance to cover a second home, or a house used as a rental property.

"The people who live in some of these areas tend to be fairly well off, tend to be quote important unquote, indicating that they have influence with politicians. So it's going to be tough. But making flood insurance actuarial – making it pay for itself – would be a major step forward. And I think greatly discourage development in unsafe areas," Pilkey said. "We're not helping the poor or the disadvantaged. This is, sometimes as it's expressed, this is welfare for the rich. There is no question about that."

Jason deBruyn is the WUNC health reporter, a beat he took in 2020. He has been in the WUNC newsroom since 2016.
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