60% of homeowners in high-risk flood zones lack insurance

60% of homeowners in high-risk flood zones lack insurance | Insurance Business

60% of homeowners in high-risk flood zones lack insurance

Sixty per cent (60%) of homeowners in high-risk flood zones don’t have active flood insurance policies, according to a new study by ValuePenguin.

Across the 100 largest US cities, there were only four active flood policies for every 10 houses in what the Federal Emergency Management Agency designates as “100-year floodplains,” according to the study. Most of the policies were concentrated in regions like Florida and Louisiana, where homeowners are generally more aware of flood risks.

However, there were fewer than two active flood insurance policies for every 100 houses located in high-risk flood zones in Boise, Idaho, Riverside, Calif., St. Louis, Cleveland, Minneapolis and Youngstown, Ohio, ValuePenguin said.

The study also found that many homeowners in 100-year floodplains do not realize that their homes have such a high chance of being flooded over the course of a 30-year mortgage.

“FEMA maps out areas at high risk of flooding through the use of the 100-year floodplain – also referred to as special flood hazard areas (SFHAs), which have a 1% chance of flooding in any given year,” ValuePenguin said. “While that may not sound like a high level of risk, it becomes substantial when multiplied over several decades.”

Many homeowners in high-risk flood zones don’t have flood insurance because climate change and more accurate mapping techniques are placing more homes than ever in floodplains, the study found.

“There may be a lag between homes getting hit with the high-risk designation and getting notice that they now need flood insurance,” ValuePenguin said.