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By Brandon Ross
An estimated 23 percent of U.S. homes and businesses are at moderate-to-high risk of flooding, despite being outside areas where the government requires properties to carry flood insurance, according to CoreLogic Inc./United States.
Only properties in what the Federal Emergency Management Agency designates as Special Flood Hazard Areas (SFHA) are likely to carry flood insurance, because they are mandated to do so to qualify for federally-backed mortgage loans, according to a Dec. 1 CoreLogic analysis.
“Nationally, more than 29 million properties (29,437,151), or 23 percent, are outside a designated SFHA despite being at High or Moderate risk of flooding,’' the CoreLogic analysis says.
The majority of residential flood insurance is covered by the National Flood Insurance Program, which expires Dec. 8. The program is billions of dollars in debt to the U.S.Treasury.
“Many property owners choose not to carry flood insurance if it is not required even though their property may still be at risk of flood,” CoreLogic said.
Lawmakers and groups interested in improving the NFIP argue that flood insurance purchases are so low outside of SFHAs because people aren’t aware of their actual flood risk, wrongly assuming that if they were truly at risk of flooding, then an authority would have let them know.
To that end, the 21st Century Flood Reform Act (H.R. 2874) was passed by the House in mid November and would reauthorize the program for five years. It would also attempt to make home buyers more aware of a property’s flood risk by requiring the seller or loan company to disclose a property’s previous flood damage and insurance claims.
The NFIP would be extended till Dec. 22 under a House-proposed continuing resolution to preserve current government funding levels and programs.
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