Last July, Bobbie Roehm found her building — Roam Vermont, a footwear and outdoor apparel store in downtown Montpelier — inundated with floodwater.
“We had about three feet of water inside the store. When the water receded, there was a residue on everything,” Roehm said. “We just had to dispose of our furniture, a lot of our fixtures, the walls had to be ripped off, and I had built in shelving units all around the store, and they had to be ripped off and discarded, and the floor had to be ripped out and discarded.”
Roehm was one of thousands of Vermonters who saw their property destroyed by the worst flooding event the state had seen since Hurricane Irene back in 2011. Unlike most Vermonters, though, she was paying for flood insurance.
Only a small minority of households and businesses in Vermont have flood insurance, paying between a few hundred to thousands of dollars a year to cover damage to buildings and their contents. Some policy holders who have received payouts have found it worthwhile, but increasing costs in a state with an already-high cost of living may leave the program out of reach for those who need it most.
The fate of two shops
While homeowners and renters insurance generally covers damage from disasters like fire, hail and wind, most policies do not cover flood damage. Instead, flood insurance has largely been provided by the federal government since 1968, through the National Flood Insurance Program. Private policies, though historically far less common, have become more popular in Vermont in the last year.
Roam Vermont is right along the Winooski River, so Roehm was required to have flood insurance to secure a bank loan for the business. She went with a private policy.
“And then after I paid back the loan, I decided to continue with the flood insurance coverage because I felt like it was important being right next to the river,” Roehm said. “I knew that we were at risk.”
The Winooski would eventually reach 21 feet, the highest recorded level since 1927. And Roam wasn’t spared.
The year of the flood, Roehm’s annual premium was $1,042 for $150,000 in coverage for the contents of the building. (Her landlord had the building itself insured.) Roehm said the policy paid out the full $150,000 amount and then discontinued coverage.
Not all of the merchandise was destroyed — the company was able to clean some clothing, while other items were untouched by the floodwaters. Roehm said a flood sale held at the Vermont College of Fine Arts helped the company survive the eight months it took to repair the building and reopen.
Unable to find another private flood insurance plan, Roehm now pays $1,335 a year for $100,000 in content coverage on an NFIP plan, the maximum possible coverage. It isn’t ideal to be paying more for less, she said, but it’s still manageable; her concern now is dealing with FEMA if the property floods again, which makes her nervous.
A few blocks away from Roam is Woodbury Mountain Toys, owned and run by Karen Williams. Woodbury Mountain Toys also flooded, but the property and contents were not insured. Williams said she had flood insurance before Hurricane Irene, but she dropped it when the premium increased from around $1,500 to $8,000 a year.
Without the possibility of an insurance payout, Williams instead went through the process of applying for a disaster loan from the Small Business Administration. After a weeks-long process in which her handler changed several times, requiring her to share her information again each time, she received an absurd number of forms to fill out.
“Finally, at the end of it, they gave me 25 documents that were between two to 10 pages each. They wanted me to sign, basically, my life away for a loan to to fix everything up. And I decided against that,” Williams said, noting that she was using money from the sale of her house — which she intended to use for another house — to instead fix the space.
Floodwaters left Woodbury Mountain Toys’ building, which Williams owns, uninhabitable, but she was able to move across the street where the business currently operates as she repairs the old space.
“It was difficult finding people to work because everybody needed carpenters and plumbers and electricians,” Williams said. “And it was just quicker for me to go across the street, so that’s what I did.”
Williams said she planned to look into flood insurance after hearing Roehm was able to get a policy under $2,000.
Public vs. private
Unlike FEMA aid, which requires a major disaster declaration, flood insurance can pay out for any flooding event — and in far, far greater amounts. But it isn’t cheap. Though rare, it’s becoming more common.
The last couple of years saw an increase in private flood insurance plans, said Kevin Gaffney, commissioner of the state Department of Financial Regulation, which regulates insurance policies (but not the NFIP, which is controlled by the federal government). Private flood insurance can offer higher coverage limits, and is sometimes cheaper than the NFIP.
In 2023, the department found 3,534 NFIP policies and 2,676 private flood insurance policies written; measured in terms of premiums, the private flood insurance market has grown from roughly 14% of the size of the NFIP in 2018 to 50% now, Gaffney said.
The average NFIP claim payment in 2023 was $71,301. For private flood insurance, it was $284,236, according to DFR data, likely reflecting coverage for more expensive houses, Gaffney said. For comparison, the average individual assistance benefit from FEMA following the July 2023 flood was $7,200.
FEMA recently changed its way of determining pricing with Risk Rating 2.0, a new rating system. It went into effect in 2022 with the aim of making the program more equitable and reducing the NFIP’s reliance on outdated flood maps. Under the previous rating system, rates were primarily based on a property’s elevation within FEMA-mandated flood maps, many of which are decades old. Now, ratings are based on a wide number of factors unique to each property.
The maps are still used to determine if a home is in the Special Flood Hazard Area, and they don’t cover the full number of at-risk areas; the department found 35-40% of claims in 2023 were on properties outside the SFHA, Gaffney said.
Insuring a destroyed home
Less than a mile west of Montpelier’s downtown, along the banks of the Winooski, is a row of houses. Among them is a blue house owned by Ed Haggett.
Haggett lived in his home for 47 years without any major flooding, he said, but he prepared for the possibility by raising the house’s heating and electricity and purchasing a small private flood insurance policy around five years ago. It wasn’t enough for the July floods.
The house was decimated. Haggett was quoted $333,000 for repairs. Additionally, the city determined it to be substantially damaged, meaning it would cost more than 50% of its pre-disaster fair market value to repair the building. When that happens, the building must be brought in compliance with the current code, which in Haggett’s case meant an additional $300,000 to elevate the house.
Haggett was paying $900 a year for a maximum building coverage of $50,000 and contents coverage of $10,000, which he said was manageable on a fixed income. His plan paid the full amount, but that wasn’t enough even to repair the existing damage, much less to bring it up to code. He instead decided to seek a buyout and apply for an SBA loan to construct an addition to his daughter’s house, where he plans to live.
Even though the property is considered 75% destroyed, he still needs to maintain flood insurance on it over the course of the SBA loan — which costs $2,300 a year through the NFIP.
“Even if it floods again, there’s not going to be any further damage, so I can never get a claim,” Haggett said, noting the house has only deteriorated further in the 13 months since it flooded. “It’s like flushing money down the toilet.”
The SBA process took over a year, and the buyout process, which isn’t guaranteed, will take longer.
“I had to go into debt,” Haggett said. “I'm really frightened, deep down to my core, that the buyout won't happen and I will leave debt to my family.”
Have questions, comments or tips? Send us a message. Or contact the reporter directly at corey.dockser@vermontpublic.org.
