As the recent string of storms and flooding on the West Coast have likely hit property owners with unmitigated costs, many Americans mistakenly believe they are covered against floods, according to Neptune Flood.
The recent string of storms and extreme flooding on the West Coast have likely hit property owners with unmitigated costs. The storm systems that drenched the state have now passed, but residents could be left counting the cost, which is compounded by the fact that only 2% of homeowners in California have flood insurance, according to Trevor Burgess, CEO of Neptune Flood.
One of the top reasons Americans don't purchase flood insurance is because they mistakenly believe they are already protected, according to Neptune Flood's third annual Neptune Consumer Survey of Flood Awareness, which found that 75% of homeowners believe they have flood insurance. However, nationally, the actual percentage is less than 5%.
The bottom line: Many U.S. residents who need flood insurance don't have it, primarily due to a lack of information and education.
“Consumers are aware of flood risk but have a hard time understanding how to protect themselves from that risk," Burgess said in a press release. “Hurricane Ian, which is projected to be the second-costliest US flood event on record, further highlighted the need to make sure homeowners know how to measure and insure flood risk."
As flood insurance in the U.S. is not part of most comprehensive policies, homeowners must purchase it separately, either from the National Flood Insurance Program (NFIP) or from a private provider. The most common reason respondents to the Neptune survey have not purchased flood insurance was that they didn't believe they were at risk (61%); followed by it simply not being on their mind (30%); not having disposable income (29%) and believing that it was too expensive (28%).
The need for education on flood risk and flood insurance in the current climate, however, is urgent and pressing. Data from Neptune Flood shows that quotes are up 40% from the first ten days of 2022 to 2023, and sales are up 600% from last year. While the public market has seen an increase, NFIP coverage in California was down 3% in 2022, decreasing 12% since 2015. In the six counties surrounding San Francisco, which is getting hit the hardest by the recent storms, coverage is less than 1.13%, the NFIP reported.
The recent storms in California were a 150-year event. However, the forecast for weather-related claims is looking hectic as climate change is causing severe weather to become more frequent and extreme, according to the American Meteorological Society. The time is now for insurers to promote education on and awareness for flooding.
Ann Seaberg is an IA contributor.