Florida has more flood insurance policies in force than any other state, according to the Federal Emergency Management Agency. Our 2 million policies provide $475 billion in coverage for homes and businesses here, even though we have managed to avoid a major storm since 2005. Floridians do not want to gamble -- to the point, at times, that outsiders think we are a little nuts.
Newscasters said over and over again this week that the two states that were hardest hit by Superstorm Sandy have not experienced a storm like this in decades. The flood insurance numbers for those states tell a story of a region that not only hasn't had a major storm for years but did not expect one any time soon.
Combined, Sandy's Top Two, New York and New Jersey, carry about $97 billion in coverage, about 20 percent of Florida's total. The states actually rank high in terms of insurance coverage and written policies. We have to remember the vast gap between Florida and the state in second place, Texas: Florida carries three times as much coverage. But Florida has more than 1,300 miles of coastline, according to the Congressional Research Service, while Texas has 367, New Jersey has 130 and New York has 127. Maybe the amount of flood insurance matches the risk?
Keep in mind, though, that the damage to New York City will cost more to repair than the damage to less built-up areas along the Gulf Coast. Bloomberg reports that the total bill for Sandy could be as high as $50 billion in economic losses and $20 billion in insured losses. Earlier projections were that the National Flood Insurance Program would be paying about $2 billion and private insurance would cover $6.6 billion in losses. Another question: Where will the other $12 billion come from?
The answer may, unfortunately, include the residents of Florida. Risk-spreading is hard with flood insurance, because only a handful of states anticipate disaster with every tropical depression. So government disaster funds cover states that don't have as much insurance, and the states that buy the coverage make up the losses by paying higher premiums. While NFIP was reauthorized and revamped, the money has to come from somewhere.
Congress will have a lot to talk about when the session starts up again.
Bloomberg, "Sandy Loss Third-Biggest for Flood Insurance," Mark Rohner, Nov. 1, 2012
Bloomberg, "Sandy Damage Estimate Raised to as Much as $50 Billion," John Gittelsohn, Nov. 1, 2012
FEMA, National Flood Insurance Program, Policy Statistics as of 8/31/2012
Our firm works with homeowners and business owners who have had trouble getting their insurance companies to pay flood or windstorm damage claims after storms like Sandy. If you would like to learn more about our Florida-based practice, please visit the Legal Help After the Storm page of our website.