As Floridians recover from Ian, most homeowners in the state do so without flood insurance
Many Florida homeowners starting the arduous recovery from Hurricane Ian will do so without the benefit of flood insurance, forcing them to either rebuild with scant resources or make hard choices about relocating.
Ian was among the most destructive storms to hit the U.S. Early estimates of residential and commercial losses range from $28 billion to $47 billion, according to property-data company CoreLogic, while other projections have put the toll at more than $60 billion. The storm's powerful eye wall was unusually large, measuring 40 miles across, while its storm surge peaked at 12 feet.
"Since Andrew, Ian is looking most likely to be the largest loss Florida has experienced," David Smith, senior leader of science and analytics at CoreLogic, said in a recent presentation.
Hurricane Andrew struck in 1992 and was the costliest hurricane in U.S. history until Katrina, in 2005, which demolished the Louisiana coast and the city of New Orleans.
Since 1992, Florida's population has grown more than 60%, exposing more residents to risk. Yet less than 1 in 5 of the state's 10 million homes has flood insurance, according to the Insurance Information Institute. Without insurance, people in flooded areas must appeal to the Federal Emergency Management Administration for direct grants, which often top out at $30,000 or $35,000 — a fraction of what they may need to rebuild or move.
The median home in Florida sells for $395,000, according to Redfin. Meanwhile, just one inch of flooding can cause $25,000 in damage, according to the National Flood Insurance Program.
Although flooding is the most common natural disaster in America, most homeowners lack flood coverage, with poorer people less likely to have insurance. The typical flood insurance policy runs around $700 a year, while the average claims payout tops $50,000, according to the most recent data from FEMA.
"Flood insurance is not equally distributed in risky areas — homeowners who are more wealthy and in Whiter areas are more likely to have coverage," said Max Besbris, assistant professor of sociology at the University of Wisconsin-Madison and coauthor of a recent book on the aftermath of Hurricane Harvey.
"Communication failure"
Nationwide, surveys show that between a quarter and a third of Americans carry flood insurance. Those without a policy usually do so because they can't afford it or are unaware they need it. When Besbris and fellow sociologist Anna Rhodes interviewed victims of flooding from Harvey, they found that "most people did not know their level of vulnerability," Besbris told CBS MoneyWatch.
"They did not think that floodwaters could rise as high as they had. The last storm they had was Imelda in 1979 — that was the benchmark that people were working with," Besbris told CBS MoneyWatch.
"This is a communication failure on the part of FEMA, local municipalities and governments, to actually tell their residents that there is an increasing risk of flooding, especially as climate change makes flooding more severe."
Unlike car insurance, which is required by law, flood insurance is optional for most homeowners, unless they live in a FEMA-designated flood zone. But with climate change making flooding more frequent and more severe, those zones are outdated in many parts of the country.
Today, about 180,000 homes on Florida's storm-battered Gulf Coast face a significant flood risk but sit outside FEMA's 100-year flood zone, according to the nonprofit First Street Foundation. Statewide, that figure rises to 350,000.
Prices creeping up
Not only are few homeowners covered by flood insurance, but the numbers are headed in the wrong direction. Since the National Flood Insurance Program began raising some of its premiums last year to account for growing flood risk, hundreds of thousands of people have dropped their federally backed insurance policies.
In Florida, about 48,000 fewer households have federal flood insurance this year than in 2021, according to FEMA figures. The trend suggests that affordability remains a concern, particularly for homeowners who are poorer or live on fixed incomes, as many Floridians do.
"Making flood insurance cost more means that less advantaged people are going to stop buying coverage," Besbris said. "When these things happen like Ian — and they will happen more and more often — whole communities, in addition to individual households, are not going to have clear pathways to recovery."