Just 40% of Losses May Be Covered, and Taxpayers Will Bear Most

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Hurricane Harvey may inflict as much as $30 billion in damages on homeowners, according to preliminary estimates. But only 40 percent of that total may be covered by insurance — and of that, the federal government will bear the biggest liability.

Private homeowners’ policies generally cover wind damage and, in certain cases, water damage from storm surges. But for almost half a century, all other homeowners’ flood coverage has been underwritten by the National Flood Insurance Program, a federal program that itself faces financial uncertainty.

Flooding has dealt the hurricane’s biggest blow. And in areas where it is prudent — or even obligatory — to buy it, having flood coverage is the exception rather than the norm.

Homeowners in areas designated as 100-year flood zones are required to hold policies from the federal program. But in practice, the requirement is difficult to enforce and most people — including in eastern Texas — fail to buy coverage or let their policies lapse by not keeping up on the premiums.

“It’s a pretty cheap buy,” said Charles C. Watson Jr., a founder of Enki Holdings L.L.C., a data analytics firm for natural disasters, who offered the $30 billion estimate for the overall damage to homes. (CoreLogic, a firm that analyzes real estate and insurance data, estimated that private insurance would wind up covering from $1.5 billion to $3 billion.)

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