Fewer Americans buy insurance in coastal areas
PLANTATION, Fla. — Amanda Spartz nearly did not renew her home’s flood insurance policy after her first year in Florida. Two hurricanes came close to the Fort Lauderdale suburbs last year, but they didn’t hit, and her home isn’t in a high-risk flood zone. She figured she could put the $450 annual premium, due next week, to another use.
Then Harvey hit Houston, its historic rains causing massive floods even in low-risk neighborhoods. Spartz, a business analyst, paid the bill this week.
If Spartz had dropped her policy, she would not have been alone. Far fewer Americans compared with five years ago are paying for flood insurance in coastal areas of the United States where hurricanes, storms and tidal surges pose a serious threat, according to an Associated Press analysis of government data. The center for the problem is South Florida, where Spartz lives. The top U.S. official overseeing the National Flood Insurance Program told AP he wants to double the number of Americans who purchase flood insurance.
“I was talking to my husband and I said that if something like Harvey happens here, I don’t want to be on the hook,” said Spartz, who relocated from Cincinnati. “It isn’t a lot of money to save yourself the heartache if it does happen.”
What’s driving the drop in policies? Congress approved a price hike, making premiums more expensive, and maps of some high-risk areas were redrawn. Banks became lax at enforcing the requirement that any home with a federally insured mortgage in a high-risk area be covered. Memories of New Orleans in 2005 after Hurricane Katrina have faded.
Without flood insurance, storm victims would have to draw on savings or go into debt — or perhaps be forced to sell.
The number of policies in force today has fallen in 43 of the 50 states since 2012, dropping from almost 5.5 million to just under 5 million, a decrease of 10 percent. In low-lying Florida, where by far more flood insurance policies are sold than in any other state, the drop has been almost 16 percent. In only two states — Hawaii and South Carolina — are at least 50 percent of homes in flood hazard areas insured under the program.