Flood risk is becoming harder to confine to the areas brokers and homeowners have historically viewed as most exposed.
US flooding caused an estimated $10.3 billion in economic losses across 15 major catastrophe events in 2025, including about $6.2 billion in insured losses, according to Aon data compiled by the Insurance Information Institute (Triple-I).
NOAA described 2025 as a year of widespread flooding across every season and region. July alone generated 1,434 flash flood warnings – the second-highest July total in 40 years – while parts of Kentucky, Tennessee, North Carolina and Texas experienced rainfall events with estimated 1-in-1,000-year recurrence intervals.
The pattern has continued into 2026. Tropical Storm Edouard brought heavy rainfall to Texas in early September, producing significant flash flooding across the eastern part of the state.
But the emerging insurance problem is not simply that floods are becoming more severe. Losses are increasingly occurring in places where homeowners may not consider themselves meaningfully exposed – and where flood insurance penetration can be much lower.
“I think there’s this binary conception of flood zones: that I don’t live in a flood zone or I do live in a flood zone,” said Jessica Chambliss (pictured), senior vice president of flood services at Davies. “The reality is everybody lives in a flood zone. There are simply layers of high risk versus moderate or minimal risk. The risk still exists.”
Development is one reason the geography of flood losses is changing. New housing, roads, parking lots and other infrastructure can reduce the amount of land available to absorb heavy rainfall. At the same time, rapid accumulation of rainfall is becoming an increasingly important source of flooding, particularly in heavily developed areas with limited drainage capacity.
“Over a long enough timeline, that cause of flooding is becoming equal to overflow of coastal, tidal or inland waters,” Chambliss said. “We need to be thinking more about what kind of absorption the ground can handle. Do I have a lot of concrete around me? Do I have a lot of roads, a lot of infrastructure?”
She pointed to western North Carolina during Hurricane Helene as an example of significant flood losses occurring in an area where relatively few homeowners carried flood insurance. The problem for brokers is that a designation suggesting moderate or minimal flood risk can easily be interpreted by clients as meaning no meaningful risk at all.
Even clients who purchase flood insurance can face a separate problem: whether their limits still reflect the cost of rebuilding. Chambliss said higher construction and material costs have increased claim values substantially over the past decade, creating greater potential for buildings to be insured but inadequately protected.
“In the last decade, we’re moving more towards underinsurance, or buildings that have insurance but are not carrying adequate insurance,” she said.
The National Flood Insurance Program's residential building coverage is capped at $250,000, potentially leaving a significant gap for homes with much higher reconstruction values. “That disproportion is going to continue to grow,” Chambliss added. “The damage is increasing significantly. The value of claims has gone up significantly over the last decade, driven, number one, by the value and price of materials, but also because the flooding itself is becoming more significant.”
That puts greater emphasis on reviewing whether NFIP limits remain adequate for an individual property and whether private flood or excess coverage is needed alongside them.
Technology is giving insurers and brokers more detailed information about flood exposure, but translating that information into how consumers understand their risk remains difficult. Predictive modeling can incorporate property characteristics, rainfall, development patterns and historical losses, providing a more granular assessment than flood-zone designations alone.
Chambliss said the weakness is not necessarily the technology. “What’s falling short is that this new information is becoming available, but the mapping isn’t keeping pace with it,” she said.
Official flood maps still heavily influence whether homeowners believe coverage is necessary. The growing availability of property-level data could therefore change how brokers approach flood conversations, particularly for clients sitting outside areas traditionally considered high risk.
“In the last decade in particular, it’s becoming more and more evident that we cannot rely on the flood maps and that we have to be looking at homes on a case-by-case basis to determine what their risk is,” she said. “A personal approach needs to be taken, in my opinion, to every home.”
