As hurricane season arrives, U.S. homeowners haven’t fixed their big underinsurance problem
By Nicole Friedman and Leslie Scism
Three major landfalling hurricanes in 2017—Harvey, Irma and Maria—revealed a widespread lack of full insurance coverage for homeowners in Texas, Florida, Puerto Rico and elsewhere. Those storms served as a wake-up call to some, but the underinsurance of Americans persists, according to regulators, trade groups and government data.
While most people have home insurance, many lack flood insurance, which is typically purchased from the U.S. government as a separate policy. Many homeowners also have home-insurance policy limits that are too low to cover the full cost of repairing or rebuilding their properties.
The number of federal flood policies covering Florida homes and small businesses rose 2% between September 2017 and May 2018, to 1.76 million, according to government data. In Puerto Rico, the number of federal flood policies surged 77%over the period, to 9,199. In Texas, 17% more households and small businesses owned the policies, bringing the total to 702,800.
“We often see post-disaster increases in flood insurance policies in force, but unfortunately, it is not unusual to see some of these policies dropped when they come up for renewal,” said David Maurstad, chief executive of the NFIP. “We have a long way to go to meet our goal of closing the insurance gap.”