Flood insurance dropped in Florida before Hurricane Ian hit

SANFORD, Fla.—Florida homeowners had reduced their flood insurance coverage in the years before Hurricane Ian dumped up to 15 inches of rain across the state, flooding coastal and inland areas.

Only a small number of homes in two of Florida’s hardest-hit inland counties are covered by flood insurance. The percentage of sheltered homes is higher in coastal areas that suffered the most damage, but is still above 50% in just one of the affected counties, according to an analysis by Neptune Flood, a private flood insurance provider.

In all places hit by Ian, the percentage of homes covered by flood policies has fallen from five years ago.

The widespread lack of flood insurance will force many people to seek federal disaster assistance in the form of grants and loans. This will slow down efforts to rebuild as people pool funds. That’s what happened after widespread flooding in Houston from Hurricane Harvey in 2017.

Flood coverage is not part of a standard homeowner’s policy. Flooding has emerged in recent years as a more serious risk after storms like Harvey and Sandy dumped record amounts of rain on the Northeast in 2012. Rising temperatures appear to be a factor. Warmer air holds more moisture and warmer oceans give storms more energy.

The 15 inches of rain that fell at Sanford Orlando International Airport in Seminole was 50% higher than the previous record of 10 inches in 24 hours set in 1992, according to the National Weather Service. Florida Governor Ron DeSantis called Ian “basically a 500-year flood event.”

Flooding, as seen in Orlando, has emerged as a more serious risk with storms like Harvey and Sandy dumping record rainfall.


Photo:

PHOTO: Gerardo Mora/Getty Images

When Amber Thorne woke up Thursday in Sanford, Seminole County, she was stunned to find a creek overflowing and flooding her yard. She doesn’t have flood insurance for her two-bedroom house. “I don’t regret having it,” she said.

About 97% of homes in Seminole County and 98% in Orange County, home to Orlando, don’t have flood insurance, according to Neptune. Neptune CEO Trevor Burgess said that based on policies his company sells statewide, about a third of residential properties in Florida’s interior counties are generally identified on government maps as being at high risk of flooding. That compares with 85% for many coastal counties.

Risk Models Karen Clark & ​​Co. estimated Friday that privately insured losses from Hurricane Ian would be close to $63 billion, including wind, storm surge and flood damage, while total economic damage will be well over $100 billion, including uninsured properties, infrastructure damage and costs of cleaning.

Ian’s landfall was outside of Fort Myers in Lee County, about 150 miles from Mrs. Thorne’s property. Some of the worst storm surge damage occurred in Lee, where about 28% of housing units are covered by flood policies, Neptune’s analysis shows.

Residential flood insurance in relation to residential units

Received 10 inches or more

of precipitation on Sept. 29

Residential flood insurance in relation to residential units

Received 10 inches or more

of precipitation on Sept. 29

Residential flood insurance in relation to residential units

Received 10 inches or more

of precipitation on Sept. 29

Residential flood insurance in relation to residential units

Received 10 inches or more

of precipitation on Sept. 29

Residential flood insurance in relation to residential units

Received 10 inches or more

of precipitation on Sept. 29

In nearby Charlotte County and Collier County, home to Naples, 31% and 41% of homes, respectively, have flood insurance. Monroe County, at the bottom of Florida, has one of the state’s highest utilization rates at 53%.

The US government’s National Flood Insurance Program, administered by the Federal Emergency Management Agency, is by far the largest seller of the policies. Private sector opportunities are becoming more accessible.

Across Florida over the past five years, the percentage of homes covered by flood policies has dropped to 15.4% in August from 17.8% in 2017.

Insurance agents and executives attribute some of the decline over the past year to rising inflation overall and double-digit increases in Florida homeowners policies. Another factor is increases in federal flood insurance rates for many homes to more accurately reflect true flood risk. Some rates will jump from hundreds of dollars annually to thousands of dollars, although most increases are capped at 18% per year.

Lenders require flood coverage for borrowers who live in designated high-risk zones.

People in Florida woke up Thursday to widespread destruction and flooding after Hurricane Ian made landfall a day earlier. Ian had weakened to a tropical storm, but strengthened back to a hurricane as it moved north toward Georgia and the Carolinas. Photo: Giorgio Viera/AFP/Getty Images

Another reason for declining enrollment in recent years in Florida is that a large number of people moving to the state have paid cash for their homes. “No lien, no claim,” said Neptune’s Mr. Burgess.

“Homeowners think that if they’re away from the ocean or a river, they can’t flood,” which is wrong, Mr. Burgess said. In fact, about a fifth of Neptune’s claims over the past five years have been in supposedly lower risk zones, he said.

In its analysis, Neptun used state residential flood insurance data along with its own issuance numbers and compared them to US Census housing data. Other private insurance companies, with generally small totals, are not reflected in the statements.

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Harrison Froid, a Pinellas County, Tampa-area agent for Goosehead Insurance,

said most homebuying customers balk at buying flood coverage. If it’s not required by their lender, “they say, ‘I’ll get back to you after closing,'” Mr. Froid said, and generally don’t.

Michael Bristol, an engineer who lives with his wife in a double-wide mobile home on 10 acres with a horse barn in Seminole County, spent Thursday afternoon cleaning up branches and other debris from their soggy yard. A creek had overflowed and the road was impassable near the couple’s property. Ditches milled with water.

Mr. Bristol says the property escaped serious damage. He had skipped flood insurance as “just too costly,” and he doesn’t see that changing. He said his plan is to “keep a decent amount in savings and hope for the best … You know, fingers crossed.”

Write to Leslie Scism at leslie.scism@wsj.com and Cameron McWhirter at Cameron.McWhirter@wsj.com

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