Floods in Oklahoma and Texas have claimed lives and destroyed numerous homes.
Rebuilding those homes and reimbursing homeowners will take months, if not a year or more. But some of those homeowners may not get all the help they will need, because they don’t have flood insurance.
In Wimberley, a vacation town in between San Antonio and Austin which is situated on a river that rose 40 feet, flood waters washed away hundreds of homes and businesses.
“There are many people… that lived along the river, that did not have insurance,” says Cathy Moreman, head of the Wimberley Valley Chamber of Commerce.
For some, price of premiums may have been a factor.
The Federal Emergency Management Agency underwrites homeowners’ flood insurance through a fund set up for that purpose. That fund was $23 billion in debt as of 2014.
Tom Baker, who teaches insurance law at the University of Pennsylvania, says the reason is that flood insurance has historically been too cheap. “It hasn’t reflected the real risk that people face,” he says.
In recent years, though, premiums have been going up. FEMA also redrew flood danger maps, which caused premiums for some homeowners to go up because they were deemed to be in greater risk, while it also lowered premiums for others.
“Everyone is paying a great deal of attention to the affordability issue,” says Howard Kunreuther, professor and co-director of the Wharton Risk Center at the University of Pennsylvania.
Kunreuther is on a government panel studying how to make flood insurance more affordable for those who need financial assistance paying for it. Among the ideas, he says, is to offer a voucher to those who can’t pay the full cost of flood insurance premiums.
But, he adds, that kind of financial help could be two years away. In the meantime, those with damaged or destroyed homes by the current floods would have few options if they don’t have flood insurance.