Perspectives on flood insurance demand outside the 100-year floodplain

Flood insurance is a vital part of household resilience. Insured households are able to recover faster and more completely after a flood than those without coverage. Insurance provides dependable funds to finance repair and reconstruction without needing to use savings, alter consumption, take out loans, or hope for what is often insufficient and delayed federal disaster assistance. Yet, despite the resilience benefits of insurance, many households at risk of flooding do not have a flood policy, even though the National Flood Insurance Program (NFIP) has made flood coverage available to participating communities for the last 50 years.

Key findings:

• Disclosure about flood risk outside the Special Flood Hazard Area (SFHA) is limited and purchase of flood insurance is not required;
• Three drivers of flood insurance outside the SFHA: (1) recent or repeated flooding outside the SFHA, (2) active and continuing outreach and education about flood risk and flood insurance, and (3) enough personal disposable income among consumers to afford flood coverage; and 
• This work suggests targeted outreach, particularly in the aftermath of a flood, could help encourage greater purchase of flood insurance outside the SFHA. In addition, a program to help lower income households with the costs of flood insurance is needed.