Hurricane Debby’s Uninsured Losses Could Top $9.7 Billion, Report Shows

Thousands of homeowners and businesses that suffered flood damage during Hurricane Debby in early August may be on their own to recover. A new report from climate risk analysis company First Street found that 78% of properties flooded in Debby are outside flood zones A or V.

Borrowers with federally backed mortgages who own property in one of those high-risk zones — known as FEMA Special Flood Hazard Areas (SFHAs) — are required to buy flood insurance. But the federal government doesn’t require flood insurance for properties outside those zones. Homeowners and businesses in those areas might not have flood insurance if their private mortgage lenders don’t require it.

Debby’s damages are “staggering,” First Street’s report notes, estimating damages in areas outside high-risk flood zones will run around $9.7 billion.

How many properties lack flood insurance?

It’s difficult to pin down how many American homeowners actually have flood insurance. Estimates vary widely — from 4% to 27% — but most people lack coverage for such an event.

Forgoing flood insurance can leave homeowners in grave financial risk, even if they don’t live in a high-risk zone. Since 1996, 99% of U.S. counties have experienced flooding. And more than 25% of National Flood Insurance Program (NFIP) claims originate outside areas at high risk of flooding.

What’s next? Staggering uninsured losses

Homeowners insurance doesn’t cover damage from flooding. Property owners who need protection for flood risks must buy a flood insurance policy. Most Americans who have flood insurance buy it through the NFIP. But in recent years, more insurers have entered the private flood insurance marketplace.

Private market insurance losses from Debby will fall below $1.5 billion, and NFIP losses will be less than $300 million, according to estimates by Moody’s RMS Event Response.

Hurricane Debby caused $12.3 billion in damages, according to First Street — with $9.7 billion of that cost occurring outside FEMA SFHAs. The analysis company estimates roughly 124,000 flood-affected properties were “likely not subject to the mandatory flood insurance purchase requirement.”

“Under the assumption that most of these properties likely do not have flood insurance, the estimated preliminary uninsured damage of Hurricane Debby ranges between $7.6 billion to $12.6 billion,” the report states.

Related articles

• 

  Florida Counties Retain Flood Insurance Discounts

  Five Florida counties held on to their National Flood Insurance Program discounts, but the reprieve may be temporary. Keep reading.

  ---

• 

  Project 2025 Aims to End 56-Year-Old National Flood Insurance Program

  Project 2025, the presidential transition plan of the Heritage Foundation, calls for the federal government to end the National Flood Insurance Program (NFIP). Learn more.

  ---

• 

  As Hurricane Season Hits, More Homeowners Pushed to Florida’s Last-Resort Insurer

  Citizens Property Insurance’s policy count rose about 1.7% since June 1, bucking state’s efforts to cull high-risk homes from insurer of last resort’s rolls. Keep reading.

  ---

• 

  Lightning Sparked $1.2 Billion in U.S. Home Insurance Claim Payouts in 2023

  Insurers paid out $1.2 billion across the country for lightning-caused home insurance claims in 2023, according to data from State Farm and the Insurance Information Institute (Triple-I). Read full article.

  ---