Lloyd Dixon and Noreen Clancy for the RAND Corporation: Even though the full extent of Hurricane Harvey’s devastating impact is still becoming apparent, one thing is for certain: Thousands of Houston-area homeowners will face massive, uninsured losses due to flood damage. It is likely that only 25 to 45 percent of the flooded one- to four-family homes had flood coverage, though precise figures for Houston are not yet available …

There are multiple reasons why homeowners do not buy flood insurance voluntarily. Research has shown that people tend to ignore low-probability risks. People may also expect government assistance. And, some people think that they have flood insurance when they do not. Our recent work in New York City found that 16 percent of homeowners who thought they had flood insurance actually did not — and that is in an area that recently experienced massive flooding. Finally, some households may find it difficult to afford flood insurance. We found that flood insurance is financially burdensome for a quarter of homeowners in the high-risk flood zones in New York City. …