Misleading Flood Maps Can Block Insurance Uptake

by | Jan 26, 2023 | News & Commentary

Despite the rising risks of flood events and flood damage, only about 4% of homeowners nationwide have flood insurance.

According to a research associate at NC State’s Center for Geospatial Analytics, this is a problem that can be largely attributed to flood maps created by the Federal Emergency Management Agency (FEMA).

The FEMA flood maps show designated flood zones that are considered most susceptible to a 100-year flood event, but an NC State study shows that FEMA flood maps underestimate the extent of flood risk by about 790,000 square miles. The study also highlights that from 2006 to 2020 more than two-thirds of flood damage reports came from outside the maps’ high-risk flood zones.

Another study shows how communities are able to contest FEMA’s flood risk designations. These appeals are often successful – FEMA cites an 89% success rate for flood map amendments – and can affect how all homeowners and communities assess the true vulnerabilities of their properties.

Finally, as climate change accelerates, FEMA flood maps will underestimate the risk of flooding by failing to account for intense rainfall events.

What does this mean for homeowners?

Flooding isn’t typically covered by standard homeowners insurance policies, so homeowners with a federally backed mortgage in designated flood zones are required to purchase flood insurance through FEMA’s National Flood Insurance Program (NFIP) or through private insurance providers like Palomar.

Many Americans, both inside and outside the designated flood zones, rely on FEMA flood maps to make decisions about buying flood insurance. Inaccurate or misleading maps can oversimplify risk and give homeowners and communities a false sense of security.

How can agents help?

A study by the University of Pennsylvania’s Risk Management and Decision Processes Center found that one driver of flood insurance uptake is strong educational programs and communication. Agents can help encourage financial resilience for their clients and communities by emphasizing the fact that floods often occur outside of designated high-risk zones.

Even if your client is not required to buy flood coverage, it’s helpful to proactively provide a quote for their consideration

Palomar Protects

Palomar’s flood insurance offerings are easier to obtain and offer broader coverage than policies backed by the NFIP. Palomar can quote any flood zone and does not require an elevation certificate, waiting period or, in many cases, an up-front payment to secure coverage.


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