As Americans in North and South Carolina make it out of the Florence floodwaters, they face another daunting task: figuring out whether they can afford to rebuild.
Few have flood insurance in the areas with the worst destruction. Home insurance does not typically cover flooding, a fact many realize the hard way. People have to purchase a separate flood insurance policy at least a month in advance of a major storm to be eligible for reimbursement.
Only about one in 10 homes has flood insurance in the counties hit by Florence, according to a Washington Post analysis comparing the number of policies in National Flood Insurance Program data with the number of housing units in counties hit by the storm. Milliman, an actuarial firm, found similar results.
In Craven County, N.C., which is home to New Bern, a city that has dominated headlines for severe flooding and hundreds of rescues, 9.9 percent have flood insurance. In Wilmington, which is located in New Hanover County and has also seen devastating flooding, slightly more — 14.2 percent — have flood insurance, according to The Post analysis. Florence has caused historic flooding around New Bern and Wilmington, two parts of the southeast coast with some of the lowest take-up rates for flood insurance.
The federal government requires flood insurance in parts of the country that are designated as “special flood hazard areas,” but many homeowners and renters still do not get it because it is too expensive or they do not believe they are truly at risk. The government does little to enforce the requirement, leaving it mainly up to banks to mandate flood insurance as a condition of getting a home mortgage.
Some wrongly believe they do not need insurance because they can rely on Federal Emergency Management Agency (FEMA) grants, but those cover only up to $33,000 in damages. The typical payout is a few thousand dollars. Flood insurance, in contrast, covers up to $250,000 for the home and another $100,000 for possessions.
Shawn Spencer in Wilmington, N.C., spent much of Saturday raking debris out of the ditches in front of his home, hoping that would keep his property from flooding. Like many, he was not sure whether he had flood insurance for his home and the bike shop he runs as a small business.
“I’m not 100 percent certain if I’ve got it‚” said Spencer, 47, who has lived in Wilmington his entire life and cannot remember flooding this bad. “The government is forever moving the flood plain.”
A key issue with Hurricane Florence and Hurricane Harvey last year is that some of the worst flooding occurred inland, sometimes in areas that were not FEMA-designated flood hazard zones. In some coastal communities, such as the Outer Banks, flood insurance take up rates are upward of 60 percent, but the rate of people with flood insurance drops off sharply just a few miles in from the coastline.
“When people hear they aren’t in a FEMA flood zone, they often think there’s no risk their area will flood,” said John Rollins, an actuary at Milliman who specializes in insurance for catastrophe events.
As catastrophic flooding continues to occur beyond the coastline, FEMA is trying to warn Americans that anywhere it rains can flood.
"Just one inch of floodwater in a home can cause $25,000 worth of damage,” David Maurstad, FEMA’s deputy associate administrator for insurance and mitigation, said on CNBC on Monday. "People think their homeowner policy may cover them from flooding, and it doesn’t.”
Low-income families are particularly at risk. They are even less likely to have flood insurance and probably lack a financial cushion to pay for hotel rooms to ride out the storm, let alone funds to rebuild. Many low-income families will turn to FEMA for aid money, but the average FEMA grant last year in the wake of Hurricane Harvey was $4,300. That is not enough to replace a trailer home, and it is far below the average flood insurance claim of $115,000.
The federal government’s other main program to help people who have severely damaged homes from flooding is a Small Business Administration loan, but low-income people often fail to qualify for the low-interest SBA loans because they do not have good credit, says Carolyn Kousky, director of policy research and engagement at the Wharton Risk Center.
“FEMA grants are a few thousand dollars. They won’t get your home back to pre-disaster conditions,” Kousky said. “When people see headlines about Congress passing $15 billion in hurricane aid, they think it’s going to households, but most of it is going to infrastructure and local governments.”