Many Americans at Risk of Flooding Are Underinsured, Unaware

July 20, 2018
Flooded home in Punta Cana, Dominican Republic
Photo: Unsplash/Tim Mossholder

Peak hurricane season is coming to the states bordering the Atlantic Ocean, and many homeowners remain underinsured, according to federal data and industry experts.

Iraelia Pernas, executive director of Association of Insurance Companies of Puerto Rico (Acodese), explains that before last year's major hurricanes (Harvey, Irma, Maria), many property owners were under the impression that their homes and businesses were fully insured, “They discovered that there were some exclusions in their policies.” Education is lacking in the industry for policyholders, says Barry Gilway, chief executive of Citizens Property Insurance Corp., "People had no idea that they had a hurricane deductible," after Hurricane Irma, The Wall Street Journal reports. Another concern is failure to update one's insurance policy: if a home is upgraded or expanded, their policy limits should be updated as well, ahead of rising rebuild costs. 

The number of federal flood policies covering Florida homes and small businesses rose 2 percent between September 2017 and May 2018, to 1.76 million, according to government data. In Puerto Rico, the number of federal flood policies surged 77 percent ​over the period, to 9,199. In Texas, 17 percent more households and small businesses owned the policies, bringing the total to 702,800. “We often see post-disaster increases in flood insurance policies in force, but unfortunately, it is not unusual to see some of these policies dropped when they come up for renewal,” said David Maurstad, chief executive of the NFIP. “We have a long way to go to meet our goal of closing the insurance gap.”

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