FEMA Has an Important Message for New Yorkers: Consider Buying Federally Backed Flood Insurance
This hurricane season, New Yorkers should consider protecting their corner of the world with flood insurance. The Mayor’s Office of Climate Resiliency and New York City Emergency Management, in collaboration with FEMA (Federal Emergency Management Agency), is spreading the word about the availability of federally backed flood insurance for New York City residents. (This recently launched campaign will run through September.) Every homeowner and renter has to do his or her own calculations, but many will find that there are strong financial reasons for buying federally backed flood insurance.
Even small amounts of flooding can cost homeowners and renters a lot. An inch of flooding can cause as much as $25,000 in damage — an unaffordable cost for many people given that, according to some studies, most households do not have $400 in savings. Flood insurance can play a vital role in helping homeowners and renters maintain their financial security and recover quickly from a flood event. For example, following Hurricane Sandy, households received an average of about $68,000 for claims submitted using the National Flood Insurance Program (NFIP), while other federal disaster aid paid out an average of just $3,500.
FEMA oversees the NFIP, offering federally backed flood insurance to residents who live in participating NFIP communities, including New York City. All New York City residents are eligible to purchase NFIP insurance — homeowners, business owners, and tenants — regardless of whether they live in the floodplain or not. Traditional homeowners insurance and renters insurance policies do not cover flood damage, making an NFIP policy the only way to ensure a property is covered after a flood.
While flooding can happen anywhere, flood insurance is of particular value for the city’s coastal communities. About 218,000 NYC residents live in areas at high risk of flooding, according to FEMA’s Flood Insurance Rate Map (FIRM), but pending updates anticipated in 2024 indicate that this number could grow to as much as 400,000. Like much of the City, the floodplain is home to a diverse population, with about 55% of residents identifying as non-white and more than 15% over the age of 65. In the City’s floodplain, 63% of residents are renters, and homeowners in the floodplain tend to earn less than homeowners in other parts of the City, with about one third making less than $75,000 annually.
Residents who are trying to decide whether to purchase flood insurance should be aware that:
- Properties in high-risk flood areas face a 1-in-4 chance of flooding during the life of a 30-year mortgage.
- Owners of these properties are federally required to purchase and maintain flood insurance if they have a federally backed mortgage or if they’ve ever received another type of federal disaster assistance.
- As climate change continues to drive sea level rise and increased storm intensity, more and more residents will face higher flood risks.
Upcoming changes to the City’s flood maps and alterations to the NFIP by FEMA (known as Risk Rating 2.0) underscore the importance of spreading the word this hurricane season. Risk Rating 2.0 will change how FEMA determines what each policy costs, potentially resulting in premium increases, largely moderate, for about 61% of New York City residents. Additionally, revised FEMA flood maps, anticipated in 2024, will double the number of City residents with a federal requirement to carry flood insurance.
NFIP flood insurance is a relative bargain for most purchasers. Policies range from about $300 per year to over $9,000 per year, far below the likely damage associated with a serious flood. The cost of premiums will likely be lower for those who register for the program before October 2021.
Even so, flood insurance is a financial burden for about one-quarter of New York City residents. The City will continue to advocate for federal changes to the NFIP to ensure that flood insurance is affordable for all New Yorkers. The City is also actively engaging with FEMA and other partners to encourage New Yorkers to purchase NFIP policies as soon as possible, to avoid new requirements and higher rates before these changes go into effect.
Every New York City owner or renter should be aware of the financial risks imposed by flooding, and of the availability of flood insurance — and they should make an informed decision about whether to purchase it. City agencies, community organizations, and residents can help spread the word by sharing social media graphics, videos, and messages on your platforms and using the hashtags #FloodSmart #NFIP to join the conversation. It takes 30 days for a flood insurance policy to go into effect, so there’s no time to waste.
