If you purchase real estate in a flood plain and obtain a mortgage, you will be required to purchase flood insurance.
Roy Wright oversees the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program. In a presentation to the Insurance-& Risk-Linked Securities Conference, Wright said to forget about checking the flood plain maps and check your drivers license. “If it says Florida, you need flood insurance.” FEMA is examining properties on coasts and in flood plains that have been repeatedly rebuilt “that we probably shouldn’t be providing coverage on.”
The national flood insurance program is now $20 billion in debt, largely because of Irma and other catastrophic storms like Harvey. Wright, during a break in the insurance conference, sat down with the Miami Herald to outline a plan to stabilize a troubled federal program vital to Florida’s real estate industry. It includes ambitious goals to double enrollment over the next five years amid a major makeover that will include more aggressive purchases of re-insurance and catastrophe bonds.
By law, only homes with federally-backed mortgages in high-risk zones are required to have insurance.
In the lead-up to Irma, an Associated Press analysis found that the number of Florida homes covered in high-risk areas had dropped by 15 percent in the previous five years. Fewer than half in hazard zones were protected from flood damage.
Wright blamed the problem partly on flood maps that, like hurricane tracking maps, can mislead homeowners on actual risks.
“We really gotta help people move beyond and quit focusing just on the lines,” he said. “Because nature, the day it rains, pays no attention to the lines.”
By contrast, when Harvey slammed the Texas coast, the national flood program insured 70 percent of the homes in moderate flood zones in Harris County. After the storm passed, 60 percent of the claims came from those moderate zones, proof that storms don’t always follow the contours of a flood map, Wright said.
“That’s true in areas of Florida as well,” he said.