Homeowners in the United States are facing a growing number of threats related to climate change. What we frequently refer to as secondary perils — hailstorms, flash floods, tornadoes, and wildfires — are contributing a larger percentage to overall losses in recent years.  Flooding is the most common and costliest natural disaster in the United States¹ contributing significantly to overall losses. In 2024, floods caused more than $8bn worth of damage nationwide.² Flooding can strike anywhere, severely affecting homes, businesses, and entire communities. 

Given the devastating effects of flooding, why are we still seeing a majority of homeowners go without flood coverage? One reason is due to a lack of education among policyholders. Many homeowners are not aware of their flood risk or that a typical homeowners policy does not cover flooding. While federally backed mortgages require flood insurance for those living in a special flood hazard area, homeowners living outside of these zones often do not purchase flood insurance. The First Street Foundation found that there are 14.6m properties in the United States at significant risk of flooding — 70% more than what is currently reflected in FEMA’s flood maps.³ Despite the increased frequency of flooding events, the National Flood Insurance Program (NFIP) has seen a decrease in the number of flood policies purchased in recent years. The number of NFIP policies has declined from a peak of 5.7 million in 2009 to 4.7 million in May of 2024.⁴

She further states, “We also see a lot of homeowners that might not even be aware that their policies don't cover flood. So, it's important for insurers and agents to talk to policyholders about their flood options.”

Cost and availability are two additional reasons homeowners aren’t purchasing flood insurance. According to FEMA, the average cost of a flood insurance policy is $96 per month or $1,152 annually.⁵ With property insurance rates already high for homeowners, ancillary coverages such as flood insurance are often the first place homeowners look to cut costs. However, advances in flood modeling are making flood insurance more affordable. Rating flood policies using location specific information allows insurers to better assess and price flood risk, translating to risk-appropriate pricing for policyholders. While the NFIP remains the primary source of flood insurance, the private market has been growing, giving homeowners more options to protect their homes from flooding. 

Most property insurance policies, including homeowners, typically exclude coverage for flood damage. Without flood insurance, individuals and businesses affected by floods are left to bear all or most of the costs toward repairs and rebuilding their properties. These expenses can be immense, causing a substantial financial drain. Most people, with limited financial resources, are challenged to get back on their feet after suffering a loss. 

Flood insurance also plays a critical role in preserving the financial stability of the community as a whole. When widespread flooding occurs, the economic impact can be devastating, leading to declines in property values, loss of tax revenue, and disruptions to local businesses.