Coastwide
Flooded coastal homes. Flickr

USA - Six-in-Ten Homes in High-Risk Flood Zones Lack Flood Insurance

As the Atlantic hurricane season gets underway, a new report analyzing 100 of the largest U.S. cities shows where homeowners face the greatest financial risk and exposure to flooding.

According to the personal financial website ValuePenguin.com’s analysis, there are only four active flood insurance policies for every 10 houses located in high-risk flood zones, or what FEMA designates as 100-year floodplains. Most of these policies are concentrated in regions such as Florida and Louisiana, where homeowners have learned the hard way about flood risks.

There are seven cities where only two out of 10 houses located in high-risk flood zones are covered by flood insurance. These cities are Boise, Idaho; Riverside, California; Detroit; St. Louis; Cleveland; Minneapolis and Youngstown, Ohio.

Not surprisingly, the lowest rates of active flood insurance tend to be in cities and states that haven’t experienced catastrophic flood damage in a long time, according to the report.

ValuePenguin.com says that changing flood maps from the Federal Emergency Management Agency (FEMA) contribute to why so many homeowners in high risk flood zones don’t have flood insurance.

“Climate change and more accurate mapping techniques are placing more homes in the 100-year floodplain. There may be a lag between homes getting hit with the high-risk designation and getting notice that they now need flood insurance. Additionally, lenders and homeowners can appeal the flood zone designation of a property to avoid the expenses associated with flood insurance,” the report says.

Homeowners in 100-year floodplains may not realize that their homes have a 26% chance of being flooded over the duration of a 30-year mortgage. FEMA maps out areas at high risk of flooding through the use of the 100-year floodplain — also referred to as special flood hazard areas (SFHAs), which have a 1% chance of flooding in any given year.

“While that may not sound like a high level of risk, it becomes substantial when multiplied over several decades,” according to the report.

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