Despite hurricanes and tropical storms that brought catastrophic flooding to the region over the past 10 years, about 4,000 fewer property owners in Galveston County own federal flood insurance than when Hurricane Ike hit in 2008, according to data from the Federal Emergency Management Agency.
Although Hurricane Ike and its destructive flooding inspired some of the uninsured to buy flood policies through the National Flood Insurance Program, the rising cost of flood insurance is a deterrent, officials said. But some studies show that property owners also underestimate their flood risks.
“Research has shown that people tend to ignore low-probability risks,” according to a post-Harvey report by the Rand Corp., a research organization that works to influence public policy. “People may also expect government assistance. And some people think that they have flood insurance when they do not.”
Flood insurance is mandatory for nearly all homes with federally backed mortgages in FEMA-defined high-risk flood zones. But it’s not required for homes without mortgages in high-risk flood zones nor homes outside high-risk flood zones.
In August 2008, a month before Hurricane Ike came ashore, home and business owners in the county held 70,515 policies through the national flood program, according to FEMA data. A year after the storm, the number of policies had risen slightly to 75,325.
By August 2017, the same month Hurricane Harvey hit the Gulf Coast, FEMA cites only 58,243 policies in the county.
In July this year, the number of policyholders spiked again to 66,402. But that’s still almost 9,000 fewer policies than in effect a year after Hurricane Ike hit.
There’s anecdotal evidence that Ike and its destructive flooding inspired some business owners to buy flood insurance.
Joe Flores, owner of Yaga Clothing Store in Galveston’s downtown, didn’t have flood insurance when Ike hit. But now he does.
“I don’t want that to happen again,” Flores said. “It’s taken years to get over it.”
Reopening Yaga Clothing Store, 2109 Strand, took about 45 days, less time than some other stores and businesses on The Strand, Flores said.
While flood insurance is still worth the investment, prices have risen over the past 10 years, Flores said.
“It’s getting to a point where it’s questionable because of the increases that keep going up with all the flooding we have,” Flores said. “It’s increased quite a bit since Ike. I would say it’s at least 30, 40 percent more.”
Still, he recommends all downtown Galveston business owners maintain flood insurance in a city at the mercy of tropical weather.
Homes receiving assistance for disaster relief through Community Development Block Grant funding must maintain flood insurance to receive future assistance, said Brittany Eck, Communications Director for Community Development and Revitalization for the Texas General Land Office.
In Galveston County, 960 homes received block grant disaster relief funds to help recover from Hurricane Ike. These funds must be used for housing repairs and infrastructure supporting housing.
“If you sell the property, that requirement is tied to the property,” Eck said. “If you do not maintain flood insurance, they will not allow you to get assistance again.”
Although the number of policies in the county has declined over the past 10 years, claims to FEMA for flooding have increased from 30,302 to 61,765. The most significant spike came from 2008 to 2009 when losses increased by 80 percent, federal officials said.
FEMA defines flooding as an event when overflow inundates 2 or more acres of normally dry land or of two or more properties. This overflow comes from “inland or tidal waters, from unusual and rapid accumulation or runoff of surface waters from any source or from mudflow,” said Larry Fordham, acting senior regional insurance specialist for FEMA Region 6.
Property owners who have flood insurance get more federal help than those who don’t have insurance, according to the Rand Corp. report.
The average claims payment to homeowners was about $90,000 from the Baton Rouge floods in 2016 and $65,000 for Superstorm Sandy that struck the Northeast in 2012, according to the report.
“The picture is not so rosy for homeowners without flood insurance,” according to the report. “FEMA’s Individual Assistance Program can provide financial assistance for home repairs, rental assistance, and other needs but the average payouts are much smaller, on the order of $6,000 to $8,000 per household.”
Flood insurance payments can be worth the cost, FEMA Region 6 External Affairs official Robin Smith said.
“The premiums that the public hear that make the news are usually the jaw-dropping ones,” Smith said. But the reality is premiums are lower, Smith said.
A preferred risk policy can cost about $150 to $450 a year, depending on coverage level, Smith said. Flood policies on property in high-risk areas such as Galveston can be hundreds more, however.