From hurricanes to wildfires, the past year has seen a number of natural disasters threaten residential neighborhoods in different parts of the U.S. It has long been understood that homeowners in coastal regions are at a disadvantage when it comes to home insurance coverage, but those who live in more inland locations also face disparities when it comes to flood insurance coverage, according to a recent report from the Consumer Financial Protection Bureau. The report finds that current flood insurance maps may not capture accurate flood risk exposure, and more than 400,000 homes in the Southeastern and Central Southwestern U.S. may be underinsured for flooding.
Homeowners who may be underinsured for flood risk also are least likely to be able to self-insure and recover from flooding. Borrowers in inland areas at risk of flooding, as identified using the First Street flood risk model, had lower incomes and put less money down to purchase their homes compared to homeowners not in inland flood areas. This included both borrowers living in areas at high risk of coastal flooding and borrowers whose homes are not in an area of high flood risk, as identified either by FEMA or First Street. Read more