Risky Decisions

All the devastation from natural disasters that have occurred across the nation in recent months illuminates the fact that many, many homes across the United States are either uninsured or underinsured.

Violent weather and flooding have been unusually intense this year, and the nation is on track for perhaps the deadliest tornado year ever. But violent storms and flooding occur annually, and despite the widespread attention natural disasters receive in the press, many consumers continue to take the risk that the worst won’t happen to them.

Even in areas where dramatic events like tornadoes, hurricanes and flooding occur year after year, the message seems not to have gotten through to folks that insurance can help them rebuild their lives after disaster strikes.

Take Louisiana, for example, which is particularly vulnerable to hurricanes and spring floods along the Mississippi River. Only 29 percent, or 484,000 out of 1.6 million, households in that state currently have flood insurance, according to Louisiana Commissioner of Insurance Jim Donelon, who is urging citizens of his state to get their properties protected as hurricane season begins.

He pointed out that 20 percent of flood claims occur in low- to moderate-risk areas. Indeed, rains and violent weather from hurricanes can extend hundreds and hundreds of miles inland, as residents in Midwestern states who were impacted by Hurricane Ike in 2008 can attest.

A recent study conducted by the Associated Press revealed that the percentage of homes covered by typical residential property policies varies by region. The South has the highest rate of homes without insurance, at 17.4 percent, followed by the Northeast at 12.2 percent, the Midwest at 8.4 percent and the West at 3.3 percent.

Additionally, census data showed that Mississippi and Arkansas have higher-than-usual rates of homes without mortgages – about 41 percent of owner-occupied homes in Arkansas and 43 percent in Mississippi, the AP found. Nationally, under a third of all owner-occupied homes are unmortgaged. Missouri stands at about the national average.

Obviously, cost is a major factor in consumers’ decisions not to purchase insurance for their property. Many people say they can’t afford it. Homeowners with mortgages are generally required by their lenders to purchase coverage, but homeowners without mortgages and renters have the option of not buying insurance.

As we’ve seen in recent weeks, many are regretting that decision to take such a risk.

Topics Catastrophe Flood Mississippi Hurricane