Living With Climate Change: Yellowstone flood wake-up call: Is your home adequately insured?

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It’s not just American treasures like Yellowstone National Park at risk to the perils of floods. For many, it’s their own backyards, gardens and basements that could be under water, increasingly because of climate change.

The flood zone is bigger than most people realize, and population shifts can mean more people moving into flood-risk areas. Plus, the impact of floods on broader regional economies, vacations and recreation, U.S. infrastructure and more can run up the bill for all Americans.

Led by the deadly and costly Hurricane Ida in the U.S. and the floods it brought, plus major flooding in Europe, the globe racked up $329 billion in economic losses linked to severe weather in 2021, and only 38% of that was covered by insurance.

In fact, insurer Munich Re calls flooding “the No. 1 natural peril in the U.S.,” and climate change is a leading contributor.

Humans have increased the amount of carbon dioxide in the air by 40% since the late 1700s. Other heat-trapping greenhouse gases are also increasing. In all, GHGs have warmed the surface and lower atmosphere of our planet about one degree during the last 50 years, the Environmental Protection Agency says. Evaporation increases as the atmosphere warms, which boosts humidity, average rainfall, and the frequency of heavy rainstorms in many places, while contributing to drought in others.

In America’s beautiful West, flooding and wildfires both have to be considered, sometimes in the same season.

Early this week, communities bordering Yellowstone were isolated and tourists stranded after record floodwaters knocked out roads and bridges in Montana and Wyoming and forced the closure of all entrances to the park, the Associated Press reported. The flooding followed a heavy rain that combined with a rapidly melting snowpack, just as the summer tourist season was ramping up.

Montana-based National Water Service meteorologist Cory Mottice said of Yellowstone: “This is flooding that we’ve just never seen in our lifetimes,” according to AP.

Read: Yellowstone officials assess damage after historic floods

The potential loss is a reminder to all that climate change is responsible for more intense and more frequent storms, droughts, floods and wildfires, scientists tell us. Of course, the modeling for such connections relies on more than one weather event. This week has already brought extreme flooding, heat, and violent thunderstorms that knocked out power to the Chicago area and parts of Ohio late Monday.

The average change in hourly rainfall intensity across all 150 stations from 1970 to 2021 was +13%.

Climate Central

Read: Blame it on the rain: Climate change has caused billions of dollars in flood damages

Take climate change seriously

Heavy downpours bring more rain over a shorter period, which can lead to flash flooding and landslides. These events are especially hazardous because their rapid onset limits time to issue warnings and get people out of harm’s way, the scientists at Climate Central stress

For sure, it’s not simply population growth, shortsighted construction decisions or insatiable demand for desirable waterfront lots that account for the costly flood damage of the past few decades. It is actually raining more often and more heavily than before, a Stanford group argued in a recent research report published in the journal Proceedings of the National Academy of Sciences.

Don’t missClimate change fueled 3rd costliest losses ever in 2021 — less than half of that property was insured

Over the past three decades, intensifying precipitation has accounted for roughly $75 billion of the estimated $199 billion in U.S. flood damages from 1988 to 2017,

Experts had questioned whether or not the increasing trend in the cost of flooding in the U.S. has been driven primarily by factors like population growth, housing development and increasing property values, or whether jumps in precipitation are superseding those factors. The Stanford study brings it all together. It turns out that changes in rain and snow accounted for 36% of the actual flooding costs that occurred in the U.S. from 1988 to 2017.

Don’t miss: A retirement safe from climate change? Ask the tough questions about real estate and property insurance

What can you do to prepare for floods (before you buy)?

Flood risk appears to be impacting more and more people. Some 13% of the U.S. population currently resides in the 100-year flood plain. That number could rise to 15.8% by 2050 and 16.8% by 2100, according to a study largely critical of underreporting in current Federal Emergency Management Agency (FEMA) mapping, addressed in a commentary by the Yale School of the Environment.

Understanding your flood risk should be among the first questions asked with homeownership or a rental agreement. Online search companies, such as Zillow, Redfin and Trulia, have been slow to alert for flood risk or other potential red-flags on listings. Realtor.com broke with that tendency, adding flood data in 2020 and wildfire data, compiled by nonprofit First Street, this year.

Risa Palm, professor of Urban Studies and Public Health at Georgia State University, and her colleague in the political science department, Toby Bolsen, wrote in a commentary of their efforts to log real estate dedication to climate-change information. 

The duo surveyed 680 licensed Florida real estate agents in late 2020. Agent responses suggest that prospective home buyers are not routinely taking elevation or flood vulnerability into account when searching for new homes, and the availability of improved flood risk maps has had little or no impact on them.

“ Some 13% of the U.S. population currently resides in the 100-year flood plain.  That number could rise to 15.8% by 2050 and 16.8% by 2100.”

You can look up select data yourself, including FEMA’s new map for natural hazards. Insurer The Hartford and MIT’s AgeLab collaborated on an awareness campaign for seniors and disasters.

But, make sure the professionals offer you the most complete data on flooding and other risks.

Do I need (more) flood insurance?

Surveys from the research firm Marshall & Swift/Boeckh have found about 60% of homeowners nationwide are underinsured by approximately 17% of the cost of their home. A quick number crunch reveals they would be short about $34,000 on the average national home price of $200,000.

Flood damage is excluded from standard homeowner’s insurance policies, yet only 15% of American homeowners had a flood insurance policy as of 2018, according to the Insurance Information Institute. 

Read: Banks increasingly unload flooded-out mortgages at taxpayer expense

Read: How to prep for another above-normal hurricane year

What’s more, flood insurance is handled with a government program, not private issuers, although with a few exceptions. 

The government program has faced its own changes — changes long in coming, say experts. Saddled with more than $20 billion in debt from hurricane payouts, the Federal Emergency Management Agency (FEMA) National Flood Insurance Program raised premiums in 2020 by an average of 11.3%, and higher for properties in the most flood-prone zones. With the increase came the first overhaul of the system — called Risk Rating 2.0 — since the inception of the program in 1968.

Insurance evolution may be evident in some places, but typically at a shocking price jump for consumers. That’s already happening in Florida, for instance, where many traditional insurance names have pulled out, in part due to a flurry of litigation to force insurers to pay more. But the exodus has reached a point where some who regularly cover the sector venture to call it a “crisis.”

Instead, specialty insurers known as excess and surplus (E&S) carriers push into these areas. They take on extra risk and often are licensed outside the state where standard insurers have left. For consumers, that may mean the chance to buy insurance when they otherwise could not, although at a higher cost, In some ways, the specialty premium may help better assign risk to the most disaster-prone areas. 

Homeowners face potential tests to the scope of their insurance coverage already, and climate change will only add to the challenge, says Brian Patillo, vice president of Goosehead Insurance, an independent brokerage which compares several carriers to find the best fit for an individual policy-holder.

For instance, many homeowners, wary of premiums and deductibles when balancing other household expenses, may have a policy that covers only up to a portion of the replacement value of their home. Perhaps that amount was set based on purchase price and what the insured person might be able to afford monthly.

But home values, material costs and construction labor may have risen since the home was purchased: a policy that maxes out at $400,000 won’t cover the exact rebuilding of a destroyed home that will now cost $550,000 because housing inflation is surging.

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