Nearly three-quarters of expected flood damage to American homes is currently uninsured, according to new data released by the Federal Reserve — and Republicans and those who don’t believe they’re personally threatened by climate change are more likely to be among those underinsured.
In a new Federal Reserve working paper, researchers estimate that there will be $24.4 billion in future annual financial losses as a result of flood damage to single-family homes — and more than $17 billion of that potential damage is currently uninsured. What’s more, 80 percent of households at risk of flood damage do not have adequate coverage, with the average home needing roughly $7,000 more in insurance to cover potential damage.
In areas known to face the most acute threat of flooding, such as those affected by hurricanes and other areas prone to flooding, more than half of the expected damage to homes remains uninsured. The study also found that more than 90 percent of those in the lowest income brackets lack adequate flood insurance — a problem that will likely become more acute as flood insurance premium rates continue to increase.
Taken together, the findings suggest that without emergency government bailouts, many Americans could face the prospect of enormous out-of-pocket costs, bankruptcy, or homelessness in the wake of expected floods.
“Understanding the magnitude of this insurance crisis is necessary to identify potential solutions for the mitigation of financial losses from physical climate risks,” the authors wrote.
The report also examined the role of people’s beliefs in their insurance decisions. In their study of millions of single-family households, researchers found that “a 10 percent higher share of survey respondents perceiving personal harm from global warming is associated with 26.7 percent lower underinsurance.” They also found that “a 10 percent higher share of Republican voters is associated with 14…
Auteur: Freddy Brewster
