In Soggy California, Few Homeowners Have Flood Insurance

In Soggy California, Few Homeowners Have Flood Insurance

ACAMPO, Calif. — On Sunday morning, Kyle Starks woke up to floodwaters washing up at the door of his Jeep after another strong storm inundated California. Emergency crews showed up with boats to take Starks and other residents of his rural mobile home park in Acampo to safety.

Beyond the physical destruction, the storm could have a financial impact: Starks does not carry flood insurance.

“I didn’t think it would flood that much,” he explained from an evacuation center, worried that the water would damage wiring and air conditioning equipment.

In California, only about 230,000 homes and other buildings have flood insurance policies, which are separate from property insurance. That means only about 2% of properties are covered against flooding. The federal government is the insurer of most of them: about 191,000 as of December. Private insurers issued the rest, according to the most recent state data from 2021.

In California, 32 billion gallons of rain and snow have fallen since Christmas. The water washed away roads, knocked out power and created landslides as it drenched hills charred by wildfires. It caused damage in 41 of the state’s 58 counties. At least 21 people have died.

A specific study is needed to learn the role of climate change in a specific climate, but warmer air means storms like the ones that inundated California in recent weeks can carry more water.

However, California’s drought has dulled people’s sense of flood risk. People tend to buy insurance after disasters when the risk is visceral, said Amy Bach, executive director of insurance consumer group United Policyholders.

“People think that the only people who need flood insurance are people who live on the beach or on the banks of a river that has a history of flooding,” Bach said. In reality, many more people are threatened by torrential or rising waters.

When buying a home, a key document will be the official maps from the Federal Emergency Management Agency that will tell you if you are in a high risk flood area. If so, and you have a federally backed mortgage, you must purchase flood insurance that costs an average of $950 per year. Many banks also require it.

However, FEMA’s maps are limited and only take into account certain types of flooding; they do not actually predict flood risk. Floods caused by heavy rains clogging storm drains are not counted, for example. The limitations mean that flood risk is underestimated nationally. The maps particularly downplay the chance of a disaster in California, according to Matthew Eby, executive director of the First Street Foundation, a risk analysis organization.

FEMA maps do not show Stark’s mobile home in a high-risk area. And three years before his neighbor Juan Reyes bought his house, a series of storms dumped record amounts of rain on the state and flooded his neighborhood.

Reyes knew this, but still did not buy flood insurance. He was too expensive, he said, and there was no need. In addition, he thought that local officials had improved the storm drainage system so that a similar flood would not happen again. But he did, and Reyes also had to be rescued by boat. He stays at the same evacuation center, hoping his house isn’t badly damaged.

The storms so damaged thousands of homes that they will need to be repaired before people can return to live in them. But Nicholas Pinter, a professor at the University of California, Davis, who researches watersheds, said California needs to prepare for even bigger events and that requires much more investment in flood defenses and more awareness of their danger.

“It is concerning that there was as much damage as there was from what was extreme but not catastrophic flooding,” he said.

State officials said that even without flood coverage, they try to help people file claims; Flooded cars, for example, are sometimes covered by auto insurance policies.

Also trying to figure out how to recover is David Enero in Merced, a community of about 90,000 in California’s Central Valley that was badly flooded. The water was ankle deep in his house. The laminate floor in his living room floated.

“It was like you were walking on a wave or a springboard,” he said. The house smells like a mix of mold, rotten hay, and septic system overflow.

January lives in a designated high-risk area where people have to buy flood insurance. He says that paying for the damages on his behalf would be unimaginable. In retrospect, he wishes he had insured his belongings as well.

Although the maps force Jan and others in certain areas to buy coverage, FEMA no longer uses its famous maps to set prices.

The agency updated its price in 2021 to more accurately reflect the risk and called it Risk Rating 2.0. FEMA says it is these revised prices, not the flood maps, that communicate flood risk to consumers. The old system put more emphasis on simple metrics: a home’s elevation and whether it was in a mapped flood zone. Risk Rating 2.0 considers distance to water, damage from heavy rain, and many other factors. Increases rates for approximately three-quarters of policyholders and offers first-time price reductions.

FEMA has long said the new ratings would attract new policyholders with prices that reveal a property’s true risk and are more accurate. However, since they went into effect in California, the number of policies has dropped by about 5%, continuing the year-over-year decline across the country.

Some are not aware of their risk.

Jay Laub, one of Reyes’s neighbors, also rescued from the floods, said that when he bought his house, insurance companies were mostly trying to sell him earthquake coverage. He said that he assumed that his house was covered by flooding. He learned this week that he wasn’t.

Laub said he is concerned that his mobile home has sunk into the soggy ground, which could require him to re-level it. He said that he is not sure how he would pay for it.

“What do you do? You’re on social security, like me,” he said. “But you know what? You take one step at a time. You just have to stay strong.”

Trevor Burgess, chief executive of private insurer Neptune, said there has been a rush on new policies with the storms. During the first 10 days of 2022, the company sold 53 in California. This year, Neptune sold 313, an increase of approximately 500%.

“Storms, even as they are this terrible tragedy, human tragedy and property tragedy, have the effect of reminding people that they are vulnerable and need to protect themselves,” Burgess said.


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