With the number of flood insurance policies in force through the National Flood Insurance Program  decreasing in the past 10 years, many homeowners are left without flood insurance, sitting at just over 5 million in 2018. According to a report from Urban Institute, even with private policies playing a major role, and an increased role in the future, the current system leaves too many homeowners vulnerable when disaster strikes.
With recovery from Hurricane Florence underway, policymakers are beginning to examine how to improve the flood relief system. Just one in 10 homeowners have flood insurance nationally, and that number jumps to one in three in cities prone to flooding such as Houston and Miami. Urban Institute data states that of those who have flood insurance, most choose to purchase private policies on their own accord, at 60 percent, while the other 40 percent bought flood insurance because it was required by their mortgage lender.
According to Urban Institute, this means that mortgage borrowers are highly conscious of the extreme damage that floods can cause, and many believe that the flood maps used by insurance companies are outdated.
This is especially true in high flood areas, especially the Houston area. According to Urban Institute, in the Houston-The Woodlands-Sugar Land, Texas nearly 80 percent of flood insurance policies are voluntary purchase. Hurricane Harvey’s recent damage may have spurred some homeowners to buy insurance, and the multiple floods in the years before Harvey likely led to an increase in the number of insured homeowners.
Newly built homes are more likely to have flood insurance as well. The share of voluntary flood insurance purchases is higher for newly built homes compared with houses built 40 years ago, with flood insurance coverage increases from about 11 percent for homes built in the 1980s to 14 percent for homes built between 2010 and 2017. Newly built homes are generally more expensive than to existing homes, possibly leading homeowners to be more proactive in protecting their investment.
Find more from Urban Institute here.