Helene dumps rain on millions of U.S. homes that lack flood insurance

On Thursday night Helene crashed into Florida's coast as a Category 4 hurricane. The giant storm with 140-mile-per-hour winds made landfall close to where Hurricane Debby hit in August and where Idalia struck just over a year ago. It quickly made its way inland, knocking out power for millions. And even before that, it started dumping rain — now 12 to 15 inches across a swath of Georgia and South Carolina, and a stunning 29-plus inches in Busick, North Carolina.  

The disaster underscores Americans' dangerously low levels of flood insurance coverage, especially away from coastal areas. 

Massive flooding is being reported across the South and into Appalachia, with photos and videos showing towns from Florida to North Carolina underwater. 

"This will be one of the most significant weather events to happen in western portions of our area," a weather service in western North Carolina said. As of Friday afternoon, the French Broad River through Asheville, had come within about a foot of its all-time record. 

In Atlanta, Peachtree Creek rose more than 20 feet from Wednesday to Friday, according to the National Weather Service. Across the US, 36 river gauges had reached major flood stage, while an additional 147 were registering water overflowing the banks of rivers. They are all in Helene's path under its torrential rains. 

Chuck Watson, a disaster modeler at Enki Research, said his latest estimate is that Helene will cause $25 billion to $30 billion in physical damage and losses. The majority of that won't be covered by insurance. "The ratio of insured to uninsured has been dropping" among US homeowners, he said, "and a lot of that is due to floods not being covered by the private sector." 

Roughly 4% of Americans have flood insurance, according to the Federal Emergency Management Agency, with the majority of those policies issued under the government's National Flood Insurance Program. The rate in no way matches the risk posed by more frequent extreme rainfall events. 

This shortfall, which has been documented for years, is caused by two main factors: Many people are unaware that regular home insurance usually does not cover floods, or that they live in a flood-risk area where this extra purchase would protect them. 

Homeowners who live within FEMA-designated flood zones are required to buy flood insurance if they have a mortgage. However, FEMA has mapped only one-third of America's floodplains, according to the Association of State Floodplain Managers. 

Moreover, most FEMA maps don't consider pluvial flooding, or flooding from rain. That's likely one reason why flood-insurance takeup away from the coasts is negligible. In many inland counties in the Southeast and Appalachia, coverage under the federal program stands at 2.5% or lower, according to an analysis of federal data by reinsurance brokerage Guy Carpenter. 

Then there are cost issues: Some Americans who had flood insurance previously are now giving it up because of rising insurance prices. 

Christopher Graham, a senior industry analyst at AM Best, a credit rating agency that focuses on insurance, described the problem of low takeup as "a combination of people not believing the risk applies to them and not wanting to pay the price." 

Homeowner insurance rates in the seven states in Helene's path — namely Florida, Georgia, South Carolina, North Carolina, Kentucky, Tennessee and Virginia — went up by an average of more than 27% from 2018 to 2023, according to S&P Global Intelligence. The price hikes have also been steep for flood insurance. FEMA, which manages the National Flood Insurance Program, in 2021 rolled out Risk Rating 2.0, an update to how it sets rates that was meant to make the program actuarially sound. 

In the first year after the update, 75% of primary residences covered experienced an increase of 18%, the statutory limit, Benjamin Keys, a professor of real estate at the University of Pennsylvania's Wharton School, testified to Congress in 2023. Half of all policyholders will see their premiums more than double after five years, Keys predicted in his testimony. Higher costs have led some people to drop their policies. 

But that is a big gamble. Flooding is the most damaging of all perils. It has cost US taxpayers more than $850 billion since 2000 and is responsible for two-thirds of the costs from all natural disasters, says Flood Defenders, a nonprofit flood insurance advocacy organization. FEMA estimates that a single inch of floodwater in a home can cause $25,000 in damage. 

Un- and under-insured homeowners typically believe they will be able to rely on help from the federal government, but FEMA provides very limited help to individuals without federal flood insurance, and even that safety net is fraying. FEMA faces a financial crisis as disasters mount, and Congress failed to replenish the federal funds used for storm aid in a government funding bill that passed this week.