On Tuesday morning, five days after Hurricane Helene struck Boone, David Marlett was headed to Appalachian State University. As the managing director of the university’s Brantley Risk & Insurance Center, Marlett planned to assist students and community members with understanding their insurance policies and filing claims. However, he was not optimistic. “I’m dreading it,” he admitted. “So many people are just not going to have coverage.”
Hurricane Helene made landfall southeast of Tallahassee, Florida, last week, with winds reaching 140 miles per hour. The storm caused severe damage, uprooting trees and creating record-high storm surges along the Gulf Coast before moving through Georgia. The most devastating effects, however, have been felt inland in North Carolina, where heavy rains began even while the storm was still over Mexico. In Buncombe County alone, at least 57 fatalities have been reported. Boone and surrounding areas experienced significant rainfall, resulting in flooded streets, sinkholes, and mudslides. Major roads were blocked, damaged, or rendered impassable.
Many homeowners in North Carolina may find themselves without insurance payouts, despite having what they thought were comprehensive policies. “The property insurance market for homes was already a patchwork system that really doesn’t make a lot of sense,” Marlett explained. He pointed to the combination of economic uncertainty, inflation, climate change, and population movement as a “bad combination happening all at once.”
Homeowners are now facing uncertainty over what private insurance covers in the wake of the storm. While average homeowner policies cover wind damage, they do not include flood damage. Homeowners in flood-prone areas typically purchase flood insurance through the National Flood Insurance Program (NFIP).
How a hurricane impacts a state plays a critical role in determining insurance costs. Hurricane Ian, which hit Florida as a Category 4 storm, led to $63 billion in private insurance claims. In contrast, much of the $17 billion in damage from Hurricane Florence in 2018 resulted from water damage, which meant that private insurers largely avoided paying for that disaster.
This separation of flood insurance from standard homeowners’ policies has roots dating back to the 1940s. Donald Hornstein, a law professor at the University of North Carolina, noted that private insurers decided they lacked sufficient data to predict flooding and, therefore, could not insure it. “In some ways, that calculation of 50 years ago is still the calculation insurers make today,” he said.
Although the NFIP provides a crucial safety net against flood damage, the program is burdened with debt and is a politically contentious issue. Recent statistics show that only 4 percent of homeowners nationwide have flood insurance. In some Appalachian areas affected by Helene, fewer than 2.5 percent of homeowners are enrolled in the program.
“Even in coastal areas, not many people buy that, much less here in the mountains,” Marlett said, explaining that many do not realize flood insurance requires a separate policy.
Flooding in North Carolina’s mountains is not unheard of; Hurricane Ivan caused significant damage in Appalachia in 2024, and flash floods from rivers are common. In some flood-prone areas, purchasing flood insurance is mandatory for government-backed mortgages, but outdated floodplain maps do not reflect current climate data.
“The biggest non-secret in Washington for decades is how hopelessly out of date these flood maps are,” Hornstein stated.
Even if water damage isn’t the cause of destruction, the storm’s mudslides—exacerbated by climate change—may not be covered under homeowners’ policies. Many of these policies exclude “earth movements,” which encompass landslides, sinkholes, and earthquakes. In states like California, insurers are required to offer earthquake insurance, while homeowners can buy additional policies covering earth movements. However, in North Carolina, where earthquake risk is low, many homeowners are unaware of these options.
The insurance industry has struggled in recent years. A New York Times analysis found that homeowners’ insurers lost money in 18 states in 2023, up from eight states in 2013. Expensive disasters like hurricanes and wildfires have increased payouts, causing insurance rates to rise. According to Insurify, the average annual cost of home insurance surged nearly 20 percent between 2021 and 2023. In Florida, where insurance costs are highest in the nation, homeowners paid over $10,000 annually in 2023—$8,600 more than the national average.
Florida has become the epicenter of the climate-change insurance crisis, with over 30 insurance companies partially or fully withdrawing from the state. This includes major names like Farmers and AAA, which faced significant losses from storms like Hurricane Ian, the state’s most costly natural disaster. Florida’s insurer of last resort has proposed a 14 percent rate increase, effective next year.
In contrast, North Carolina’s insurance market remains stable, with no insurers leaving the state since 2008. Homeowners pay an average of $2,100 per year, a steep amount but much lower than states like Florida, California, and Texas.
Hornstein noted, “What traditionally has happened is that there’s a rate increase every few years of 8 to 9 percent for homeowner’s insurance. That has kept the market stable, especially when it comes to the coast.”
Despite this stability, the increase in natural disasters raises concerns for the future of the insurance industry. The NFIP is currently undergoing changes to update how it calculates flood insurance rates, but expanding the number of homeowners required to buy policies could face political resistance. Homeowners are already experiencing rising flood insurance costs as the NFIP adjusts rates based on new climate models.
Experts argue that the private market should better reflect the true cost of living in disaster-prone areas. This means it could become more expensive for residents in areas prone to storm damage. Florida, one of the fastest-growing states, continues to see coastal cities thrive, despite risks.
Asheville, at the center of Buncombe County, was once viewed as a safe climate haven. Now, it faces the aftermath of Hurricane Helene. For many homeowners, small business owners, and renters in western North Carolina, the destruction from Helene will have lasting impacts. FEMA assistance may only cover a fraction of the value of homes. While auto insurance typically covers flooding, it offers little consolation for the loss of a home.
“People at the coast, at some point after the nth storm, they start to get the message,” Hornstein said. “But for people in the western part of the state, this is just Armageddon. And you can certainly forgive them for not having appreciated the fine points of these impenetrable contracts.”
Marlett pointed out that some countries have developed insurance models to better address climate change challenges. For example, New Zealand offers comprehensive policies covering all types of potential damage to homes. These policies are tailored to the risks and ensure that homeowners are protected from climate-related disasters. However, Marlett finds it difficult to envision a similar overhaul in the U.S., given the entrenched, fragmented system in place.
“I sound so pessimistic,” he admitted. “I’m normally an optimistic person.”
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