Rising Flood Waters Shine Light on Flood Insurance Gap Across the Country

Flooding, the most common natural disaster in the U.S., can have huge consequences for homeowners, businesses, and communities. With the emergence of climate change and increase in severe weather, flooding is impacting ever widening areas, but at least 85% of homeowners still lack flood insurance. Flood insurance empowers families and communities to recover and thrive in the wake of disaster.


Flooding is the most common natural disaster in the United States, causing considerable damage and property loss for homeowners in the aftermath of hurricanes or other catastrophic weather. In 2019, approximately 14 million people were affected by flooding and almost 200 million were at risk (source). It has become a looming issue for coastal cities where continuous development, local geography, and rising sea levels have increased flood risk (source). However, heavy rains have also brought devastating flooding to the Midwest and highlighted the need for flood insurance for those in inland areas, as well. The emergence of climate change, subsequent uptick in severe weather, and associated cost of recovering from flood damage pose a significant threat to the stability of home and business owners around the country.

In 2019, approximately 14 million people were affected by flooding and almost 200 million were at risk.



It’s becoming increasingly clear that climate change is influencing variables that contribute to flooding, and it’s not getting better. As global warming affects rainfall patterns, communities around the country are experiencing more severe weather. Extra precipitation combined with continuous land changes and increased construction that harms natural protective systems, heightens the risk of wide-spread destructive flooding (source). Research shows more flooding in the Midwest, Northeast, and Mississippi River Valley while coastal flooding has increased 200% in recent decades. Looking forward, heavy precipitation events are expected to increase by at least 50% and the frequency of category 4 and 5 hurricanes in the Atlantic basin is likely to rise 80% by the end of the century (source). As global warming causes sea levels to rise and instances of extreme weather to increase, U.S. floodplains are expected to grow by up to 45% (source).

Coastal flooding has increased 200% in recent decades and flooding is expected to worsen significantly over the next several decades.


As of September 2019, the U.S. had already experienced 10 major weather disasters, each causing at least $1 billion in damage. Even so, a 2018 Insurance Information Institute survey found that only 15 percent of American homeowners currently have flood insurance (source). This is due in large part to the misconception that homeowners policies cover flooding or that flood insurance is only necessary if you have a federally-backed mortgage and live in a designated floodplain. It’s true that property worth more than $1 trillion is currently situated within the East Coast’s 100-year floodplain, and coastline populations continue to grow, emphasizing the need to address flood risks in hurricane-prone areas. But, flooding has also surprised communities further inland. The Midwest recently experienced staggering flash flooding after an extremely wet winter was followed by torrential spring rains (source). Non-coastal states including Kentucky, Oklahoma, Illinois, and Tennessee were hit with severe flash flooding when areas experienced a month’s worth of rain in a single day (source).

A 2018 Insurance Information Institute survey discovered only 15% of American homeowners currently have flood insurance.



Despite the known benefits of insurance and the fact that flooding can happen anywhere, there is still a large gap in flood insurance across the country. Approximately 30% of flood losses happen outside the 100-year flood plain, and according to FEMA, flooding is a factor in greater than 90% of the United States’ disaster-related property damage. It’s estimated that over the course of a 30-year mortgage, homeowners have at least a 30% chance of flooding, incurring no less than $50-60K in recovery costs. As little as one inch of water in a home can equate to $25,000 in damage (source). It’s not unusual for structures with significant damage to require total gutting and rebuilding, which can be a devastating expense for uninsured homeowners as the cost of building materials continues to rise. In 2018, home reconstruction costs went up 6.6% due to increasing materials, labor, and equipment costs (source). The cost of repairs from flooding have also increased as knowledge about the health dangers of mold grows (source).

Damage to homes and buildings isn’t the only risk to consider. Local economies also take a big hit in the wake of flooding. Farming communities in the Midwest suffered massive losses in 2019 when flooding prevented planting and harvesting. According to the USDA Farm Service Agency, 19.3 million acres of crops went unplanted (source). In Nebraska alone it’s estimated that the flooding cost $1B in agriculture production losses, with the state taking a $2B hit to the economy as a whole (source). Such overwhelming statistics demonstrate that flood insurance is a vital piece of both household and community resilience, providing dependable financial aid to cover the cost of rebuilding or repairs without depleting savings or acquiring unwanted debt.

Estimates indicate that over the course of a 30-year mortgage, homeowners have at least a 30% chance of their home flooding, with repair costs totaling no less than $50-$60K.


Many agents are hesitant to enter the flood insurance market because they don’t fully understand flood risks or are intimidated by the amount of time and information needed to obtain a quote (source). Originally, flood insurance could only be purchased through the National Flood Insurance Program (NIFP), a safety net created by Congress in 1968 to compensate for a lack of available flood insurance in the private market. While there is still a clear need for the NFIP’s ability to provide flood coverage in repeat or high-risk flood areas, law changes over the last few years have made space for a growing private flood insurance market (source 1, source 2, source 3). Private insurance carriers are now able to provide highly competitive coverage that often comes to the aid of policyholders more quickly than government programs (source).


Flooding can happen almost anywhere. Agents report receiving more flood insurance inquiries than ever before as national coverage of unprecedented flooding causes clients to wonder if they’re at risk. Don't be intimidated by the market. You don’t have to be an expert to write flood insurance because CRC Group has producers who specialize in personal lines coverage across the country. 

Contact your CRC Group producer today to discuss how we can help your clients when it comes to their flood insurance needs. 


  • Ben Tschepikow is a Broker with Argenia, a CRC Group Company, located in Little Rock, AR and is a member of the Personal Lines Practice Advisory Committee.