Flood risk is growing for US homeowners due to climate change. Current insurance rates greatly underestimate the threat, a new report finds
(CNN)Wildfires and hurricane-force winds produce stunning videos and headlines, but flooding is the most common and costly natural disaster in the United States.
And almost no place in the country is immune as 98% of all counties in the US have experienced at least one flooding event. In the last decade alone, floods have caused more than $155 billion worth of damage, according to the Federal Emergency Management Agency (FEMA).
As the climate changes, the risk of financial loss from flooding for millions of homeowners is increasing.
A new report finds that there is a growing gap between the financial threat homeowners face from flooding and the insurance rates some pay to cover that risk.
Currently, there are nearly 4.3 million residential properties around the country with a substantial risk of financial loss due to flooding. The report defines “substantial risk” as carrying a 1% chance of flooding in any year.
Some, but not all, of those homeowners have insurance through the federal government’s National Flood Insurance Program (NFIP), which provides more than 90% of the flood insurance policies in the US.
But the report finds that those homes face losses each year which dwarf the costs of their NFIP premiums. The average NFIP premium cost today for those properties is around $981, but their expected annual losses are $4,694 per property.
If all of those property owners were to purchase flood insurance to protect against potential damage, premiums would need to increase by 4.5 times to cover the risk.