Flood Insurance and Rising Sea Levels

by Daniel Brouse (March 2017)

Q: Who pays for flood insurance?
A: The United States government, FEMA, covers losses for people that pay flood insurance premiums.

Q: Does your homeowners insurance policy cover you in the event of flooding?
A: No.

Flood insurance coverage is very limited. For instance, basements and belonging in a basement are not covered. Life-time coverage is also limited. If a property has a pay-out in the past, it will be applied to the maximum coverage of the life-time coverage.

As climate change causes extreme weather events and the sea level to rise, houses that are prone to flooding will find it harder and harder to get flood insurance. Without flood insurance, properties located in a flood plain become almost impossible to sell.

For years, the casinos in Atlantic City, NJ have had a plan to float the casinos and move them westward as the sea level rises. Shipping ports face a similar problem, but how can you move a port inland? Coastal areas will need to start a constant and progressive movement to higher ground.

Freddie Mac mortgage says, "Insurance is an essential component of real estate transactions, and flood insurance currently makes it possible to obtain loans for homes in areas of identified flood risk. However, some of the varied impacts of climate changeórising sea levels, changing rainfall and flooding patterns, increasing temperaturesómay not be insurable. As a result, some important features of housing finance may have to change. The potential impact of these systemic changes on the financial system is difficult to visualize today." (More from this article.)

The Rising Sea Level
How Do We Handle Flood Risk?
Flood Insurance Index
Global Warming Index

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