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80% of Homeowners Without Flood Insurance in Houston

As much as 80% of homeowners who have been crippled by last week’s Hurricane Harvey, lack flood insurance. Regular home insurance covers wind damage but not flooding. Flood insurance is a separate policy by government-run National Flood Insurance Program and very few homeowners purchase the coverage if they aren’t told to do so by the lender when their home is not in a floodplain.   In Houston’s case, that’s 80% of all homeowners which means millions of homeowners will be dependant on private charity and government aid in the next few months and years rebuilding their lives back. My first reaction to this news is that a city with a population of 6.3 million, a maximum elevation of 50 feet, and prone to Hurricanes, why are only 20% of homeowners in a flood zone? Unfortunately, flood insurance premiums are too expensive for most homeowners to maintain.  If more lenders required the insurance, premiums would be a lot less expensive. Looking back at California (where CALCAP originates most of its loans) it is not standard practice to require earthquake insurance before originating a loan. It might be time for California lawmakers to require EQ coverage so that premiums can be lower and a reserve can be built up for when the big one hits. Hint: It will look a lot like what Houston is going through currently and maybe a lot worse. In the meantime, I encourage you to donate to the Hurrican Harvreliefeif fund as I have to the red cross. Your donation is much in need at this time.

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