After Ida's torrents this week — and with Hurricane Larry lurking in the tropics — Connecticut homeowners are getting a fresh reminder about flood insurance to protect their biggest investment, but with cost a major deterrent despite the threat of absorbing a massive financial hit in any inundation.
In Connecticut, about 32,400 flood policies were in effect as of July under the National Flood Insurance Program, with coverage underwritten by the Federal Emergency Management Agency and sold through some 60 insurance carriers. Last year, the nonprofit First Street Foundation estimated that more than triple that number of Connecticut properties were at risk of a major flood based on updated data analysis.
FEMA offers up to $250,000 in coverage for damage to houses and major systems like furnaces, with businesses able to get $500,000 in coverage. The Connecticut Insurance Department posts information and links on flood insurance options at portal.ct.gov/cid.
NFIP premiums average $1,500 a year in Connecticut, about on par with the average homeowners insurance policy as calculated by the Insurance Information Institute. NFIP rates are scheduled to go up in October on a majority of policies, as Congress deliberates on a reauthorization of the program.
"Flood insurance is getting more and more expensive — it's driving up certainly in places like Florida," said Gov. Ned Lamont, during a Friday inspection of an embankment for Metro-North tracks in Redding that was partially washed away during Ida. "These [storms] are hitting us several times a year now."
As the case with the 2012 storm Sandy, New Jersey absorbed a more punishing blow than Connecticut, with drone footage showing neighborhoods, homes and vehicles flooded. Sandy trailed only Hurricane Katrina in 2005 for claims to the National Flood Insurance Program, with NFIP paying out $8.8 billion to more than 132,000 policyholders in 16 states.
But in many years, claims are few. NFIP has paid out more than $500,000 since last October to just over 30 Connecticut policyholders, with about 130 more claims still under review and about 30 getting denials of coverage.
With reports of flooded basements, claims are expected to spike across the Northeast. Overall insurance losses from Hurricane Ida could exceed $18 billion in the United States, according to catastrophe modeling firm Karen Clark & Co. which did not break out flood claims from other property and casualty insurance policies.
While a small number of insurers have experimented with underwriting their own insurance pools for flood coverage, the private market peaked in 2018 at $541 million in premiums written, receding 47 percent the following year. The insurance industry is already bracing for billions of dollars in claims from property owners in the path of wildfires in western states, and any storms to come in the 2021 hurricane season which runs through November.
On Friday in Redding, Lamont's environmental commissioner said that Connecticut's infrastructure is not built to absorb the punishment of storms like Ida, Sandy and Tropical Storm Isaias in 2020 — and that homeowners need to be prepared for the next one. Hurricane Henri gave Connecticut a scare last month as it roared north toward Long Island, with wind and water damage far less than feared upon landfall.
"These kinds of events are now happening with regular frequency," said Katie Dykes, commissioner of the Connecticut Department of Energy and Environmental Protection. "We think about climate change and often people think about sea level rise, but the impacts of climate change [include] ... not just coastal flooding from hurricanes and tropical storms, but also seeing a deluge like what we experienced with the remnants of Ida."
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