Georgia flood insurance prices may rise due to climate change
For the average homeowner, few activities sound more tedious than spending an afternoon reviewing insurance policies.
Deciding what kind of risks your home has and how much you're willing to dish out on a possible incident is a growing concern for many Georgians as storms and flooding become more frequent.
Rising tides, rising risks
Storms are becoming stronger than they once were, and scientists note they are slowing down, causing storms to dump more water on concentrated areas and worsening floods.
Coupled with other climate change related threats like sea-level rise in coastal communities and development, which can pave over soils that help absorb flood water, insurance agencies are forecasting more flooding, and more risk for their customers and businesses.
The
While the old
Georgians may already have seen the shift in their flood insurance policies. According to
Counting the costs
According to the experts, insurance - and its prices - all boil down to risk.
"One thing that's important to understand is that we've seen multiple years of increasing catastrophe, losses that have impacted the insurance industry, and certainly the people that are exposed to those events," Hoyt said.
According to the
When companies insure a home, Hoyt said they are assuming financial risk that in the event of a flood, they'll be paying out funds, meaning companies are expecting to pay out more money as the number of flood incidents increases.
Some
Hoyt said another important part of the price-equation is reinsurance, where companies themselves are buying insurance and transferring part of the risks that they have by writing insurance policies to other companies. Reinsurance is good in that it distributes and diversifies risk, making insurance companies less likely to fold. But it will make insurance more costly for Georgians in the long run.
Prices on the rise
In the past,
"The Flood Insurance Program through the years ... it's just constantly in a hole because of all these disasters," McDonald said.
With the adjusted Risk Rating 2.0, he said the agency will move from subsidized insurance to actual rates with prices climbing 18% per year until Georgians hit the actual rate.
With those hiking prices, McDonald does share concern that some homeowners will drop their flood insurance. The most expensive policies will be where people are most vulnerable, and it only takes one strong hit for those properties to experience catastrophic damage.
If a homeowner has a federally backed mortgage and is in a high risk flood area, then flood insurance is also required as part of that loan. Private lenders can also stipulate flood insurance.
When buying a house, McDonald said it's important to look into whether the structure has flooded in the past and to call up the city floodplain manager's office to learn more about risks. Before buying any insurance, homeowners should consult with their insurance agent or company to learn more.
For homeowners struggling with repeated flooding, McDonald said the city has some options, including
Worth the investment
While it may seem obvious, McDonald said flooding is expensive, and far more expensive than miscalculating the need for flood insurance. For each flood event in a house, he said NFIP could be paying up to
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