One reason why people might not be getting the coverage they need is through a simple misunderstanding of their insurance policy.
Loretta Worters, vice president of III, said that while most disasters are covered under a standard homeowners policy, flooding is not. Homeowners aren't necessarily aware of this fact and underestimate the importance of talking to their insurance agent.
"They don't read their policies," she added. "They say, 'I've got my insurance, now I'm done.' "
Flood coverage is almost exclusively provided by the NFIP and a few other private insurers and the lack of competition among flood insurance providers has kept premiums relatively high. This distinction in policies and who provides them requires households to make an extra purchase when considering buying flood insurance.
Flood insurance premiums are determined by individual flood risk, based on location, elevation as well as the structure and contents of one's home. According to the NFIP, the average cost of flood insurance is currently $700 per year but according to the Federal Emergency Management Agency, premiums can inch over $10,000 for full-risk households.