07 May New Study Finds Correlation Between Income and Flood Insurance
A new study is finally shedding some light on how wealth affects the availability of flood insurance both in Louisiana and nationwide. The study poses the question: how can we help lower-income people afford policies? Even though some flood policies are discounted, the discounts are based on when houses were built. Unfortunately, flood maps have changed since then. As it turns out, flood insurance policyholders have drastically higher incomes than those who are uninsured. The National Flood Insurance Program is using the findings from this study to determine if policies are affordable.
Low-income is defined as making less than 80 percent of the median income. In the study, it was determined that nationwide, people who have flood insurance are wealthier than those who do not. In tangent with these findings, lower-income families are more likely to live in a high-risk flood zone. That is not true for Louisiana, however. The study found that for those living in high-risk flood zones nationwide, 26 percent of policyholders are low-income and 51 percent of non-policyholders are low-income.
As proposed by the study, there are three different ways to measure the affordability of flood insurance. First, look at whether it is affordable for those who are below a certain income threshold. Another way to tell if it is accessible is to limit premiums to a certain percentage of household income. A third way is to consider coverage unaffordable when a household’s housing burden rise above a certain level. Take a look at both income and flood insurance data, and you’ll find that Louisiana households that carry flood insurance have incomes about double that those of households that do not carry it.
We are here to help when it comes to deciding to purchase flood insurance. If you are in the market to buy flood insurance, then contact a knowledgeable agent at AWS today!