To Flood or Not To Flood...That is the Question!
A study produced by Milliman, an international insurance actuary, estimated that 13,237 homes were purchased in 2021 in North Carolina that had previously been damaged in floods. None of the sellers of those homes were required to tell the buyers about the history of flood damages. And a home that has flooded once is likely to flood again.
The study found that in 2021, 6.6% of all purchased homes in North Carolina had previously been flooded, to the tune of $16 million. In a 15 year period a buyer of a previously flooded home in this state can expect to incur $18,164 in damages due to flood.
When considering moving to a new area and buying a new home, you have very little knowledge of the history and patterns surrounding that area, not to mention potential for damage. Even in the study, Milliman's analysis tried to estimate the number of homes with flood damage between 2010 and 2021 as well as the risk for future flooding. Using the National Flood Insurance Program (NFIP) and OpenFEMA Policy and Claim data, as swell as KatRisk Models they were able to approximate and see an increase in flood damaged homes while looking at major storm and flood events including Hurricanes/Tropical Storms Earl, Sandy, Andrea, Arthur, Ana, Hermine, Matthew, Harvey, Irma, and Florence as well as the Louisiana floods of 2016 and Colorado floods of 2013.
The North Carolina Real Estate Commission (NCREC) has been working diligently to reverse this law. As we spoke with local real estate agents, it was clear that they are all very much against this little loophole. The lack of honesty and disclosure by home sellers is not something any of them ever want to have to deal with, especially when we are in the peak of hurricane season. As of the first of this month, the public commentary period was closed on changes they are proposing to the state’s mandatory disclosure form. The NCREC is looking to add a series of important specific questions about flooding that home sellers will have to answer and provide to a home buyer. At the moment, one can simply write "No Representation" and no further questions are asked. So, whether they are unknowing or unwilling to disclose past history of flood damage, no one knows. It is up to the home buyer to perform due diligence by researching past historical events, using flood plain models, etc. to make informed decisions.
If you currently have any questions or concerns regarding insuring and protecting your home from floods, please don't hesitate to call us and discuss your options.
910.762.8551
insurance@wellsins.com
