Accuweather estimates that damage from Hurricane Harvey could reach $190 billion, which would make it the costliest natural disaster in U.S. history.
And the cost of repairs could fall on consumers. The Consumer Federation of America estimates that 80 percent of homeowners affected by Harvey didn't have flood insurance.
The trend is also seen nationwide. Most Americans are still without flood insurance. In fact, the number of policy holders have declined.
A 2016 poll by the Insurance Information Institute (III) found that 12 percent of American homeowners had a flood insurance policy. In 2015, 14 percent of homeowners had a policy.
“Harvey is a stark reminder that you don't have to live along a river, you don't have to live along a stream or the Atlantic Ocean to be at risk for flooding. We learned that last year in Ellicott City. Literally, we learn it every year,” said Maryland’s Insurance Commissioner Al Redmer Jr.
And yet in Maryland, only three percent of households are covered, according to data from the National Flood Insurance Program (NFIP) and census data.
“Many homeowners don't know that flood insurance is not covered. Flood is not covered under a basic homeowner's policy,” said Redmer.
Redmer added that a lot of people may not have policy because they don’t want the added expense. However, the average premium is close to $700 a year, and the average claim is nearly $40,000, according to the III.
“It's never worth it until you need it,” said Redmer. “And I was a victim of flooding myself in 2003 with Hurricane Isabel and fortunately, I had flood insurance.”
Johns Hopkins Professor John Boland has studied the affordability of the government-backed national flood insurance program. He says it works for consumers but it’s a flawed program.
“Flood insurance, everyone gets flooded at once in a large area like Houston so the claims are huge and there's no way the insurance carrier can ever get that back through premiums,” said Boland, professor emeritus with a focus on environmental economics and policy.
The program is now more than $24 billion in debt, and yet it's the only choice for some looking to purchase flood insurance.
So as long as it stays afloat, it's an option for those wanting to protect themselves from financial ruin following the next natural disaster.
“The premiums and all the rules are calculated based on flood maps that are typically 3-10 years old and which do not reflect climate change, so the flood risk is growing every year and the area that will be flooded is growing every year. In Houston, there were large areas flooded that were never flooded before,” Boland said.
According to FEMA, about 25 percent of all flood insurance claims come from areas with low-to-moderate flood risk.
Hurricane peak season is in October and any plan typically takes 30 days to take effect.
If you'd like to learn more about the NFIP, click here.