NCPA - National Center for Policy Analysis

National Wildlife Federation Study: Flood Insurance Pays Off Repeatedly

July 17, 1998

Tens of thousands of homes across the nation have been flooded again and again. Then some of the owners repeatedly collect federal flood insurance -- often exceeding the homes' true value.

That is the conclusion of a report from the National Wildlife Federation, which wants the government to buy up more houses in flood-prone areas.

  • The study documented 5,629 homes -- or almost 10 percent of the houses flooded more than once -- where cumulative flood insurance payments exceeded each building's value.
  • In all, these homes were valued at $307.5 million, but their owners received $416.4 million in payments -- more than a 35 percent overrun.
  • Louisiana and Texas were the states with the highest costs for repetitive loss claims .
  • New Orleans and Houston topped the NWF's list of the 200 costliest areas for repeated flood claims .

Nearly 59,000 single-family homes were flooded more than once during any 10-year period between 1978 and 1995 -- with claims for at least $1,000 each time. Their owners received $2.6 billion in flood insurance payments.

In one case, a house in Houston was flooded 16 times in 18 years. Its owners received $806,591 in payments -- even though the house was only worth $114,480.

The federally-operated insurance program is supposed to break even, but is actually hundreds of millions of dollars in debt. The NWF is backing a Clinton administration request for more funds to buy up flood-risk homes, which they contend will save the government money in the long run.

Source: "Higher Ground: A Report on Voluntary Property Buyouts in the Nation's Floodplains," July 1998, National Wildlife Federation, 8925 Leesburg Pike, Vienna, Va. 22184, (703) 790-4000; John H. Cushman Jr., "Citing Insurance Costs, Group Urges Agencies to Buy More Houses in Flood Plains," New York Times, July 17, 1998


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