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Fannie Mae Finds Opportunity to Raise Consumer Awareness About Floods

3,533 people responded to a 15-minute survey from Fannie Mae in November and December 2020 about the National Flood Insurance Program (NFIP) to better understand consumer awareness, understanding, and attitudes toward flood risk, flood insurance, and related resources. 

Respondents were selected for the survey based on where they lived in and around a flood zone and was meant to be a representative slice of the general population as a whole. Respondents were placed into one of three categories: the high-risk category represents an area with a 100-year flood event, the medium risk category represents a lower risk category of a 500-year flood zone. The third category was adjacent properties, which was measured as a landowner within 1,500 feet of a water source that has less than 30 feet of elevation difference between the two points. 

Overall, the survey found multiple areas in need of improvement on the topics of buyer knowledge and homeowner participation which was the ultimate goal of the survey: to find what needs to be fixed and where. 

For example, overall awareness of flood risk is low, particularly for those in high-risk zones where it was found that 84% of respondents were aware in general of the Flood Insurance Program, only 40% of respondents could accurately indicate on a map what type of flood zone they resided in. 

Despite government-supported loans being required to have flood insurance, nearly 40% in high-risk zones claim they do not have insurance because they do not live in a high-risk zone; part of this disconnect could come from the fact that insurance is often escrowed along with the mortgage payment. 

It also found awareness of FEMA’s NFIP and their own individual flood insurance coverage is poor across all property types. 54% of owners in high-risk areas were aware of the NFIP; that number drops to 40% when expanded to low-risk areas as well. In addition, only 23% of those that subscribe to the NFIP know what their insurance covers. 

People in medium-risk zones have an outsized perception of safety and are the least prepared based on risk profiles. It doesn’t help that only 5% of people in a medium risk zone could correctly identify their zone and only 16% in the medium-risk zone are certain they have flood insurance. 

Fannie Mae said that these points highlight how those in medium-risk zones might not be aware of risks brought on by climate and sea level change, putting themselves at a higher risk for future loss. 

The survey also found that many owners are not being informed of the flood zone insurance requirements with only 42% of high-risk claimed to be informed versus only 24% in the medium risk zone. 

1-in-8 have personally experienced flooding – a little less than half of those in the past five years. About half of those experiencing floods had insurance and nearly 80% of those filed a claim. The average damage cost was near $39,000 with average cost of about $7,400 out of pocket. Sadly, only 26% of those that had experienced a flood said that insurance paid all of their claim. 

To view the entire 79-page survey, click here. 

About Author: Kyle G. Horst

Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].
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