Vermont Is the Soggy Edge of America’s Flood Insurance Crisis

Torrential rain drowned parts of New York State and Vermont this week, bringing “historic and catastrophic” flooding, in the words of Vermont governor Phil Scott. Now, as the immediate horror of the event recedes and evacuees journey home, many are sure to face another disaster: unrecoverable property loss and damage.

Despite the region experiencing several destructive storms in recent memory, including Hurricanes Irene in 2011, Sandy in 2012, and Ida in 2021, very few residents in the Northeast have flood insurance policies. According to the Federal Emergency Management Agency, only about 1% of properties in Vermont and 2% in New York State had policies in 2021 through the National Flood Insurance Program, or NFIP, which administers most flood insurance policies in the United States.

The Northeast is not unique in this regard. The U.S. flood insurance market has been contracting since 2009, even as climate change has brought more damaging floods and storms to many parts of the country over the same time period. Even in Florida, which has the most policies in effect of any state, uninsured losses are racking up. About 13% of homes were insured for flooding during Hurricane Ian last year, and the state still incurred an estimated $10 to $17 billion in uninsured damages.

The pattern threatens to blight communities and increase economic disparities as the effects of climate change intensify. “Without a national plan to make flood insurance affordable and accessible, many more will continue to struggle after these storms,” wrote Carolyn Kousky, an expert on flood insurance at the Environmental Defense Fund, in an op-ed in The Hill after Hurricane Ian.

Flooding is already the most common and costly natural disaster in the United States, and it’s expected to get worse. Climate change will raise sea levels, putting coastal communities at risk of more dangerous storm surges. A warmer atmosphere also sucks up more water from the land, only to dump it back down later. The Fourth National Climate Assessment found that heavy precipitation events could increase in the U.S. by at least 50% of the historical average by the end of the century. Much of this rain will occur in areas all over the country that didn't previously see flooding. Rainfall intensity in the Northeast has already increased at a faster rate than anywhere else in the U.S.

Still, it’s no big mystery why so few people purchase flood insurance, even in hurricane-ravaged places like Florida. It’s expensive, confusing, and many people are either ignorant of their flood risk, unaware their regular homeowners insurance doesn’t cover floods, or willing to roll the dice.

There are few options on the private market, and they tend to cost more than policies through the NFIP. But the national program’s policies can still cost upwards of $1,000 per year. The only people required to have a flood policy are those with a federally-backed mortgage who buy property within a “special flood hazard area” — an area deemed to have a 1% risk of flooding in any given year. But the maps designating those areas are out of date in much of the country. Flood risk is not static, as urban development continuously drives changes in hydrology. Some experts say that even when the maps are updated, they don’t adequately reflect flood risk — by, for example, not taking climate change into account.

Janet Thigpen, a flood mitigation specialist in upstate New York, told me that when she talks to residents about flood insurance, most of the time it’s because they are asking her how to get out of buying it. “It's a cost, it’s not cheap, and they don't feel there's value,” she said. “They either say, I've lived here for however long and it has never flooded and it's never gonna flood, or, it flooded but that was a record-breaking flood and it's not going to happen again.” She added that many seem to think that if their homes do flood, insurance won’t actually cover a lot of the damages.

But when a storm comes through, insurance can mean the difference between putting your life back together and being forced to abandon it. Although President Biden approved an emergency declaration for Vermont on Tuesday, which will give residents access to disaster relief and emergency assistance, those grants are typically only a few hundred dollars and are capped at $5,000. National flood insurance policies, on the other hand, pay out up to $250,000.

It’s too early to tally up the full economic toll of this week’s floods, but Vermont Governor Scott said Tuesday that thousands of people lost homes and businesses. Studies have found that there’s often an uptick in flood insurance contracts after a disaster like this, but many let their policies lapse in the proceeding years as memory of the event fades.

There’s much debate and disagreement about how to improve the national picture for flood insurance, John Zinda, an environmental sociologist at Cornell told me. On one hand, insurance puts a price on living in a risky place, and from that perspective, the cost of flood insurance should be high in the riskiest places. FEMA recently introduced a new insurance pricing system called Risk Rating 2.0 that attempts to better capture that risk. It has led to major increases in premiums for homes built in floodplains. (A number of states and municipalities are suing FEMA over the changes.)

On the other hand, said Zinda, that way of thinking assumes that people living in floodplains have willingly taken on that risk. The reality is more complicated given that floods are increasing due to climate change. Urban development and the expansion of impermeable surfaces, like concrete, also severely exacerbates flooding hazards. “There are all sorts of things that happen over time such that somebody who got their house 20 years ago wasn't really making that choice, and now they're stuck there,” he said.

Some experts and policymakers want to improve FEMA’s buyout program for that reason. Many, including Kousky of the Environmental Defense Fund, and FEMA itself, have also put forward proposals for making flood insurance more accessible by providing targeted subsidies to those least able to afford it.

“Another way of thinking about the National Flood Insurance Program,” Zinda told me, “is that it technically works like insurance, but it’s actually part of our social safety net.”