Homeowners felt safe to forgo flood insurance
Risk was considered tiny, then the worst happened
Before he and his wife bought their comfortable red-brick house in this well-heeled Houston suburb, Michael Granberry recalled one of the first questions he asked his real estate agent before settling on the home: Will it flood?
The agent assured the couple before the biggest purchase of their lives nearly 15 years ago — and about a year after Tropical Storm Allison battered the Houston area, causing billions of dollars in damage — that they had nothing to worry about.
Their home, the agent noted, sat on a 500-year floodplain on the Federal Emergency Management Agency’s flood maps — meaning experts had determined his neighborhood faced a rather infinitesimal possibility of major flooding.
That once-in-several-lifetimes flood came this week with Tropical Storm Harvey.
Yet, Granberry, whose home filled with about 2 feet of murky water, may be one of the lucky ones. He’s among the minority of Houston-area residents with
coverage — only about 20% of homeowners in the region with flood damage have insurance protection, according to a Consumer Federation of America estimate.
“Every year, I debate whether I want to pay for it or not,” said Granberry, adding that he didn’t purchase a $500-a-year policy until 2011 despite his trepidation. “But then I thought to get peace of mind, I’d better get that flood insurance. We do it every year now, but sometimes I thought it was wasting money. This time it paid off.”
The storm that few could imagine — dropping a near alltime U.S. record of 51.9 inches on the Houston area — is set to wallop, if not ruin, financially thousands of homeowners in this battered region.
Mortgage lenders often require homeowners living in a 100-year floodplain to buy flood insurance. Lenders are far more relaxed in neighborhoods such as Granberry’s where the experts deemed flooding from a damaging storm to be a long shot. As of April, only about 15% of homes in Harris County — which has 1.8 million houses and is home to Houston, the nation’s fourth-largest city — have active policies from the National Flood Insurance Program (NFIP), according to risk consulting firm Aon.
Few of Granberry’s neighbors said they purchased flood insurance. Some in the neighborhood, a subdivision of large single-family homes built in the early 2000s, said they had considered the insurance but decided it was an unnecessary expense, considering that FEMA mapped their area as low-probability for flooding.
“We made that risk assessment,” said Donnie Guillory, who estimated it would take $80,000 to
$100,000 to repair his house, flooded by about 2 feet of water. “If it was in a designated floodplain, we’d have had the insurance.”
In total, the storm will result in
$30 billion to $40 billion in property damage, according to an early Moody’s Analytics estimate.
Much of that damage occurred in areas such as Friendswood that are not in a FEMA-designated
I thought to get peace of mind, I’d better get that flood insurance. ... Sometimes I thought it was wasting money. This time it paid off.” Michael Granberry, Houston
“special flood hazard area” that requires flood insurance to obtain federally insured mortgages.
A little more than half of residential and commercial properties in the Houston metro area that were at “high” or “moderate” risk of flooding during Harvey are in areas that do not require owners to carry flood insurance, according to an analysis by CoreLogic, a global property information and data firm.
Though Houston and its surrounding communities are rapidly growing in population, the area has 25,000 fewer flood-insured properties than it did five years ago, according to an Associated Press review of FEMA data.
Part of the reason for the dropoff may be Congress’ decision in
2012 to raise premiums for the National Flood Insurance Program (NFIP). More than 90% of all flood insurance policies in the country are issued by NFIP.
Much of Southeast Texas was not considered on FEMAmapped zones as at risk of flooding despite a rapid increase in population in Houston since
2000 that pressured the area’s drainage systems.
Tony Graham, 56, whose home was filled with 18 inches of water, said storms have flooded the streets of his subdivision before, but the water always stopped far short of his and his neighbors’ doorsteps.
Not this time.
Said Graham, “We didn’t have flood insurance, because where we live, we didn’t expect we’d need it.”