Flood Insurance in Communities at Risk of Flooding
Report
CBO examines how the share of properties at risk of flooding that are covered by policies purchased through the National Flood Insurance Program varies across communities with different economic and demographic characteristics.
The federal government makes federally backed flood insurance available to people in areas that participate in the National Flood Insurance Program, or NFIP, by employing floodplain management practices that meet the program’s minimum requirements. Currently, 3.1 million properties (parcels of land used for any purpose) are covered by policies offered by the NFIP; that program provides almost all the nation’s flood insurance policies.
In this report, the Congressional Budget Office examines how the share of properties at risk of flooding that are covered by NFIP policies varies across communities with different economic and demographic characteristics. The agency considers properties to be at risk if they have at least a 1 percent annual probability of experiencing a flood of a depth of roughly 1 foot or more, which is equivalent to having about a one-in-four chance of experiencing at least one such flood over a period of 30 years; currently, about 9 percent of properties face such a risk.
CBO found that most at-risk properties did not have flood insurance through the NFIP as of May 1, 2023. Of at-risk properties with NFIP policies, about 90 percent had a discounted premium, and some of those discounts were time limited, or temporary. The agency also found the following:
Household Income. Properties at risk in communities in which median household income was lower were less likely to be covered by NFIP policies. Those policies were also less likely to have premium discounts.
Primary or Secondary Residences. At-risk properties in communities in which most dwellings were secondary residences were more likely to be covered by NFIP policies, and to be covered by policies with premium discounts, than those in communities in which most dwellings were primary residences.
Coastal or Inland Location. Properties at risk in coastal communities were more likely to have NFIP coverage and more likely to be covered by policies with premium discounts than were those in inland communities.
Other Characteristics. The likelihood that a property was covered by an NFIP policy also varied when communities were defined by the race or ethnicity of householders (generally, the person in whose name a residence was rented or owned), whether households included a senior or a child, and whether most residences were occupied by renters or homeowners. The variation among communities grouped by those characteristics was smaller than the other variations discussed above.