Insurance and Flood Risk in 2020
According to the “Sizing the Personal Flood Insurance Market” analysis by Verisk Analytics, there are 62 million U.S. homes with a moderate to extreme risk of flooding, and the National Association of Insurance Commissioners says 90 percent of all natural disasters in the United States involve flooding. However, the Insurance Information Institute says only about 15 percent of U.S. homeowners carry flood insurance.
One obstacle to greater flood insurance takeup is the misunderstanding among homeowners that flood coverage is part of a standard homeowners insurance policy, which it isn't. Secondly, there is too heavy a reliance of federal flood maps, which are often outdated and inaccurate. Greater flexibility and more private market flood insurance could improve flood insurance takeup, especially as catastrophic modeling tools have improved dramatically in recent years, say experts.