No insurance and a lack of savings may lead to thousands of homeowners seeking federal disaster assistance in the wake of Hurricane Florence, according to a risk management and insurance professor. The Wall Street Journal reports that the latest statistics indicate that there has been a decline in flood coverage policies in North and South Carolina, leaving thousands of people in the lurch should a flooding disaster strike.
“As of July 31, the latest figures available, the 134,306 policies in place in North Carolina from the National Flood Insurance Program represented a 3.6% decline from 2013. In South Carolina, ownership was down 1.2%, to 204,342…”
A typical homeowner’s insurance policy would only cover the damage from storm-related events but would normally “exclude storm surge and other flooding damage.” For specific cover against flood damage, a homeowner would be encouraged to buy a flood policy from the U.S. government.
Professor Robert Hartwig from the University of South Carolina’s Darla Moore School of Business points out that residents from North and South Carolina may be less equipped to deal with disaster than in the past. He added that this trend of a lack of flood coverage is widespread in the U.S. and is exacerbated by the low savings balance of people across the country.
“We’ve seen people who’ve gotten their mortgages paid off, and even if they are in a high-risk flood zone, they haven’t experienced flooding in their neighborhood, so they say, ‘I’m not going to pay thousands of dollars for this insurance.'”
Hurricane Florence is said to be atypical from the normal hurricane due to its landing location, which makes it a hard case for insurance companies who try to predict where natural disasters will strike. In fact, the Carolinas have only experienced two hurricanes as strong as Florence. Hurricane Hazel struck in 1954 and Hugo in 1989, costing $15 billion and $20 billion respectively.
The second unusual factor is that it is predicted that she will slow down and gather more power and water, causing storm surges as more seawater is forced inland. This is when many predict that the actual damage will occur as heavy rains will wreak havoc.
However, at least one North Carolina county is said to be more prepared than the rest. Dare County boasts roughly 60% of its housing units having flood insurance policies from the government. South Carolina paints a much starker picture.
“In South Carolina, two of the eight coastal counties have coverage rates above a third of the estimated housing units.”