NORFOLK, Va. — For most people, Hampton Roads and Northeastern North Carolina are beautiful places to call home. Each city and town is ripe with its own culture and close to so many coastal landmarks. While the countless miles of waterways can be a calming escape, they also pose a danger to residents who deal with the impacts of coastal and tidal flooding.
As more insurers are choosing to limit their exposure to climate risks and protect future financial investments, major carriers are still pulling out of coastal neighborhoods in Virginia and North Carolina.
In 2023, WTKR reported several major insurance companies were leaving local customers without coverage.
Fred Drummond of Virginia Beach was one of the thousands of residents dropped.
“I don't think most people are looking at this until it actually happens to them,” he says.
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Why some insurance companies are pulling out of Hampton Roads
Drummond’s home sits about three blocks from the Oceanfront, and he’s lived there since 1977. He says he was dropped by his insurance company last year despite being with them since the 1980s.
“You feel very vulnerable because you suddenly realize that if you cannot get insurance, or if the insurance goes so high [that] you cannot afford it, then the mortgage company is going to call your loan due and it goes into foreclosure, you lose your house,” he said. "So, there's your life."
Committed to following through on Drummond's story, I wanted to see how he's been doing since that July interview.
“I called every insurance company you can imagine, and nobody was writing insurance,” he said.
That was the same story for a lot of people, Joel Scata says. He’s with the Natural Resources Defense Council, an environmental advocacy group.
"You start to see some insurance companies thinking that the costs are just too much and start to pull out from those areas because for them to get reinsurance, which is like insurance for insurance companies, is becoming more expensive, too," he said.
In part, NRDC tracks climate change and researches how it impacts homeowners.
He says climate change is causing rising sea levels and bigger rainstorms, which are adding to increased flooding across the nation. He says it puts the burden on homeowners and renters.
“There's not enough communication about the risks that people can face and what's covered and not covered in insurance policies,” he says.
Homeowners often don’t even realize that their policy doesn’t include flood protection. In fact, if you want flood insurance, you'll need to turn to FEMA and its National Flood Insurance Program.
“The federal government is really the backstop for flooding,” Scata says.
For perspective on how damaging floods can be, I looked through a 2022 report by Milliman. The consulting firm found the average homeowner in North Carolina could expect to pay upwards of $45,000 over a 30-year mortgage in flood damage alone.
The federal government can pay out those claims, but only if you're in the National Flood Insurance Program (NFIP). North Carolina's Department of Insurance Commissioner Mike Causey told me that after Hurricane Florence, they learned most people were not enrolled in NFIP.
He says 23 counties in North Carolina were declared disaster areas and 88,000 homeowners lost their homes.
“We also learned that very few people had flood insurance,” he said. "It was less than 2% of the homeowners in North Carolina."
He says people relied on their homeowner’s policy, only to find out that it didn't cover flood damage.
So, his department started a private flood insurance program.
“We have about 25% more homeowners today with flood insurance than what we had back in 2018,” he says.
In addition to that, his office reports that over 100 private policies have been written through the private flood insurance program.
His office is holding online workshops from April to October to help with continuing education, getting agents recertified and preparing for hurricane season.
Back in Virginia, Farmers Insurance agent Carrie Lewis says the calls for coverage haven't stopped.
“I would say in the last year, it's really picked up a lot because we've had major insurance carriers pull out of our area,” she says.
She told me she doesn't expect it to slow down either.
“If you have a good agent, or you have an agency that's responsive and has resources, even when a company pulls out, [your agent is] able to shop it for you and see what they can pull and replace it with,” she says.
Drummond echoes that advice. He tells me he ultimately found an agent to connect him with a secondary insurance company.
“I say the agent is critical to get the necessary information to the secondary insurer,” he says.
