Flood insurance is one of the rarer insurance coverage. It is specifically covering the loss of property as a result from flooding. Despite living in an area with a risk of flooding, only 20% of all homes in more risky areas of America are covered with this insurance. There are also not many insurers include this insurance in their offerings, as this is an insurance that will be hard in gaining them any profit.
Why Getting Flood Insurance is Harder in United States?
Although there are many areas in the United States that needs to be covered by flood insurance, the adverse selection makes it harder for people to choose their preferred insurance. In some areas, the government makes it a requirement which is backed by FHA and VA as federal agencies. However, this regulation has never worked as expected because it is charged lowly and does not offer much flood insurance coverage in return.
Besides the rarity of insurance companies offering flood insurance to their customers, it is also a condition that is rather hard to define. There are a lot of flooding caused by other disasters such as earthquakes, hurricanes, landslides and other natural disasters. There are actually earthquake insurances that will cover the loss caused by it, but it might not cover loss caused by the flooding that follows.
Lack of Knowledge about Flood Insurance
There is also another thing that makes flood insurance rates so rarely taken seriously, and that is because of the people’s belief that their insurance also covers flooding. In most cases this is not the case, however, and there is even more false belief that low-risk areas’ citizens are not legible to get the insurance, especially renters. There are still many things to do in the United States to make the people more aware of this flood insurance, and hopefully in the future there will be more insurers offering this along with other home insurances.