Flood Insurance Changes Needed

The editors of The Standard (a weekly publication covering insurance issues in New England) recently came out with some very interesting comments on flood insurance.

They quote some interesting statistics: “Almost half (49 percent) of all homeowners in special flood hazard areas (SFHA) carry the coverage, which is smart when you consider that a home located within an SFHA has a 26 percent chance of suffering flood damage during the term of a 30-year mortgage. The average flood claim came to $32,056 in 2004. The average premium was $438.”

The fact is that only 1 of 4 floods are in a SFHA and only 1% of homes outside SFHAs are insured for flood.

The insurance industry must find a better way to address coverage for of flood damage.

Perhaps the government could help by cutting aid to those who have not purchased flood insurance. Reward good choices and penalize bad choices.