Natural Disaster Policy

A house destroyed by a tornado featuring a pick-up truck upside down in its front yard

Natural Disaster Policy

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Quick Takeaways

Insurance challenges are increasingly affecting real estate transactions in high‑disaster‑risk areas
Rising losses and rebuilding costs are driving higher rates and reduced coverage in some markets
Capped or subsidized rates can obscure the true cost of homeownership, creating risk for buyers and real estate professionals
NAR provides resources to help real estate professionals and clients navigate insurance and disaster risk
Federal disaster policy should provide timely post‑disaster response and pre‑disaster investments to help property owners reduce physical risk—the most effective way to improve insurance affordability and availability

Insurance is increasingly becoming a challenge for real estate transactions in some high‑disaster‑risk areas around the country. As disaster losses and rebuilding costs rise, insurers may need to adjust rates or limit coverage to reflect their costs. If states subsidize or cap rates, buyers may purchase homes before they fully understand those costs upfront, which can expose real estate professionals to reputational or legal risk—and obscure the total cost of homeownership.

While real estate professionals are not insurance or disaster risk experts, they are increasingly asked by clients to help navigate these issues. NAR provides a wide range of resources—from brief consumer guides to in‑depth analysis—for real estate professionals to share with clients and help answer their questions. NAR also offers experts, resources, and points of contact for real estate professionals to refer clients as needed.

NAR is also advocating in Washington, DC for a federal disaster policy that improves insurance affordability and availability. While the federal government is generally limited to a supporting role, it has intervened where there is a clear market failure (such as flood insurance) and to support state and local governments when disasters overwhelm their capacity to respond. The federal government also provides educational, technical, and financial assistance to support state programs and help property owners and communities better withstand natural disasters.

NAR supports policies that provide timely post‑disaster response as well as pre‑disaster investments to help homeowners reduce their physical risk, which is the most effective way to lower insurance costs and improve availability. Providing more granular and accurate disaster risk information can also help homeowners better understand potential costs and make more informed decisions before purchasing in areas where insurance could eventually become unaffordable—or even unavailable.

See References for more information

Natural Disaster Policy Topics

Featured

Consumer Guides

Resources for Members and Associations

Evaluating a National Disaster Insurance Program

November 8, 2024

NAR conducted an actuarial analysis on the feasibility of creating a new federal insurance program that would cover all natural catastrophe perils.

The Case for Wildfire Risk Ratings at Realtor.com®

May 16, 2022

Giving buyers a window into fire risk adds transparency and enables owners to plan with fire safety in mind.

Fire Factor™ FAQ

Fire Factor™ supports NAR policy to provide more accurate natural hazard mapping with full transparency and disclosure. Learn more.

Disaster Preparation Resources

Be prepared – and help your clients feel prepared - before disaster strikes.

Transaction Guidance After Natural Disaster

July 28, 2024

When disaster strikes a property during a pending real estate transaction, there are many important issues that must be addressed.

Planning for a Disaster

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January 12, 2022

Download a checklist, some best practices, data management ideas, and much more to prepare you for a natural disaster.

Flood Insurance

The National Flood Insurance Program provides hundreds of thousands of dollars of flood coverage where required for a federally backed mortgage.

FEMA-NAR Toolkit: Flood Preparedness Resources

The following collection of materials from FEMA is available for use by real estate professionals and lenders.

Flood Insurance & Disclosures

February 21, 2025

Flood-related disclosures can generate a deluge of legal and ethical questions. Former NAR Associate Counsel Deanne Rymarowicz provides answers and more.

State Flood Disclosure Tracker

May 15, 2025

NAR worked with the Legal Research Center to conduct a complete, thorough, and accurate survey of existing state flood disclosure requirements.

Flood Insurance Reports by State

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September 28, 2023

NAR has created reports by congressional district underscoring the importance of flood insurance to property owners across the United States.

Information Packet: Realtor.com® Home Flood Factor™ Data

Check out NAR's comprehensive packet of educational information for NAR members to talk with customers about the Flood Factor™ data.

Advocacy

What is the fundamental issue?

Congress must support federal disaster policies that harden homes and reduce risk, improving the cost and availability of home insurance.

I am a real estate professional. What does this mean for my business?

While not disaster risk or insurance experts, real estate professionals are increasingly asked about insurance costs in high-risk areas.

Insurance rates provide an important signal about the total cost of homeownership. If rates are subsidized or artificially constrained, buyers may purchase properties without understanding the full cost, potentially increasing reputational and legal risk.

Reducing physical risk at the property level through targeted home improvements is the most effective way to lower insurance costs—helping stabilize real estate markets, support housing affordability, and strengthen long-term community resilience.

NAR Policy on Natural Disaster Insurance

NAR supports federal disaster policies that provide timely post-disaster assistance, incentivize pre-disaster risk mitigation, and improve access to risk information so consumers can make informed decisions.

Legislative/Regulatory Status/Outlook

NAR supports modernizing U.S. disaster policy to strengthen immediate response, recovery, and long-term resilience through the following measures:

Federal Disaster Assistance Reform (FEMA Act)

NAR supports H.R. 4669, the Fixing Emergency Management for Americans (FEMA) Act, which would make disaster assistance more effective by prioritizing permanent home repairs, allowing mitigation and resilience upgrades during rebuilding, and reducing reliance on prolonged temporary housing. The legislation passed the House Transportation and Infrastructure Committee by a 57–3 vote and awaits consideration by the full House. NAR also submitted comments on the FEMA Review Council report supporting FEMA reforms and strengthening its role in state and local disaster response, recovery, and long-term resilience.

Risk Mitigation Incentives and Insurance Affordability

NAR also supports federal legislation that helps homeowners reduce disaster risk through grants and tax incentives for home‑hardening, mitigation, and resilience investments, recognizing that lowering risk at the property level is critical to improving insurance availability and affordability. Examples include:

H.R. 1105 – Disaster Resiliency and Coverage Act of 2025, which would provide federal funding to states to offer grants for household‑level, pre‑disaster mitigation on existing homes, paired with tax incentives to encourage home‑hardening;
H.R. 1849 / S. 336 – Disaster Mitigation and Tax Parity Act, which would exempt state disaster mitigation grants from federal income tax, encouraging greater investment in resilience by states and property owners; and
H.R. 6763 / S. 3497 – Shelter Act, which would provide a 25 percent tax credit for qualified mitigation expenses related to floods, hurricanes, and wildfires.

NAR will continue working with Congress to advance disaster reforms that reduce risk, improve insurance availability, and support more informed decision‑making before and after disasters.

NAR Committee

Insurance Committee

Current Legislation/Regulation

HR 4669: Fixing Emergency Management for Americans (FEMA) Act

HR 1105: Disaster Resiliency and Coverage Act of 2025

HR 1849 / S. 336: Disaster Mitigation and Tax Parity Act

HR 6763 / S. 3497: Shelter Act

FEMA Review Council Report

In-Depth

Letters to Congress

Congressional testimonies

Letters to federal agencies

Issue summary

NAR Federal Issues Tracker

Legislative Contact(s):

Austin Perez,
aperez@realtors.org
202-383-1046

Regulatory Contact(s):

Austin Perez,
aperez@realtors.org
202-383-1046

References

NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.

Disaster Insurance Coverage

While the exact coverage will vary from policy-to-policy, the following list should give you a good idea of the types of natural "disasters" that a standard policy covers:

Fire / Lightning
Windstorms / Hail
Freezing of Plumbing / Pipes
Damage from Weight of Ice
Volcanic Eruptions (with exceptions)

Source: Which Disasters are Covered by Homeowners Insurance? (Insurance Information Institute)

Information From NAR

Consumer Guide: Fire Damage and Policy Coverage (National Association of REALTORS®)

NOTE: Consumer guides do not constitute any change in NAR policy. Real estate professionals must ensure they market properties consistent with relevant MLS rules and educate sellers on the choices available.

Consumer Guide: Homeowners Insurance (National Association of REALTORS®)

Consumer Guide: Flood Insurance (National Association of REALTORS®)

The Quest for Coverage (NAR REALTOR® News, Feb. 9, 2024)

Suggest that buyers in disaster-prone areas get an insurance binder during the contingency period, if possible. “This way, you verify that the buyers can get insurance, are OK with the cost, and can still get the loan if some kind of natural occurrence comes up,” Gillam says.

Future-Proof Your Community (NAR REALTOR® News, Apr. 17, 2023)

Insurance has long been the main safety net for property owners, but investors and managers interviewed for the ULI report say relying solely on insurance may not be sufficient. “There’s increased recognition that while insurance can protect against damage, it’s never going to protect against a fundamental change in real estate value,” Burgess says.

Disaster Preparation Resources (National Association of REALTORS®)

“Educational resources for real estate professionals, including how to plan for, protect against, respond to and recover from natural disasters.”

FEMA-NAR Toolkit: Flood Preparedness Resources (FEMA-National Association of REALTORS®)

“Find educational resources and promotional pieces to outline the financial protection flood insurance offers and explain various flood insurance requirements to homeowners and business owners.”

The Economy of Hazards (On Common Ground, Jun. 5, 2025)

“Because the damage caused by extreme weather doesn’t end when the fires go out and the floods retreat, what remains is a shaky financial foundation that could reshape entire communities. And without resilient planning actions and better land-use decisions, it could be just a matter of time before the full financial burden of disasters is felt in all communities across the country.”

Disaster Insurance Basics

Does Home Insurance Cover Natural Disasters? (Forbes, Feb. 5, 2025)

A standard home insurance covers all types of disasters except those that are specifically excluded. The best home insurance policy will cover damage from:

House fires such as kitchen fires
Wildfires
Ice, snow and deep freezes
Lightning
Volcanic eruption
Wind and hail
Hurricane wind damage (except in certain coastal areas)
Falling objects such as tree branches

As Home Insurance Bills Go Up, Owners’ Coverage Is Going Down (The New York Times, Feb. 16, 2024)

Those who own their homes or other properties outright have much more leeway to decide whether or not to insure their properties. Some wealthy homeowners are willing to take the risk of being underinsured because they can afford to repair their properties themselves.

How to Financially Prepare for and Recover from a Natural Disaster (CNBC, Jul. 14, 2026)

You’ll want a policy that includes coverage for your home, your belongings, your liability and any additional living expenses you incur if your home is unlivable. You’ll also want to consider additional coverages for detached structures not covered under a standard homeowners policy, as well as scheduled coverage for valuables, like jewelry and fine art.

Frequently Asked Questions (FAQs) (DisasterAssistance.gov, Oct. 27, 2023)

“Can I apply for FEMA assistance if I have insurance?

Yes. You may qualify for FEMA assistance even if you have insurance. By law, FEMA cannot duplicate benefits for losses covered by your insurance. So, you need to file a claim with your insurance company as soon as possible.”

Climate Change and U.S. Property Insurance: A Stormy Mix (Council on Foreign Relations, Aug. 17, 2023)

When property insurance becomes unavailable or too costly, some homeowners choose to go without. That means they bear the entire loss should disaster strike, unless government or philanthropic aid materializes. When it comes time to sell homes, high-priced insurance or the inability to obtain property insurance could depress the price of the home.

Settling Insurance Claims After a Disaster (Insurance Information Institute)

“Your insurance company may send you a proof of loss form to complete or an adjuster may visit your home first. (An adjuster is a person professionally trained to assess the damage.) In either case, the more information you have about your damaged possessions -- a description of the item, approximate date of purchase and what it would cost to replace or repair -- the faster your claim generally can be settled.”

Disaster Assistance (U.S. Small Business Administration)

You can use an SBA disaster loan to cover: Losses not covered by insurance or funding from the Federal Emergency Management Agency for both personal and business OR Business operating expenses that could have been met had the disaster not occurred.

Where Rising Climate Risks and Insurance Costs Will Hit Hardest (Brookings Institute, Apr. 16, 2026)

“Through its effect on the homeowners insurance sector, climate change could pose a massive threat to affordability. First, as premiums increase in response to rising risk in some regions, homebuyers may struggle to take out an affordable mortgage. Second, low-income homeowners tend to be price elastic, meaning that they respond to higher premiums by dropping or reducing coverage. With more families living in disaster-exposed areas than ever before, this means cash-strapped families will be forced to accept a higher level of financial risk when a disaster inevitably occurs… This analysis highlights that insurance market instability is unlikely to affect all communities equally. Instead, it’s a product of adaptive capacity, exposure to hazards, and underlying differences in access to affordable homeownership, among other factors.”

4 Ways Climate Change is Impacting Home Insurance, Putting us at Risk (Environmental Defence Fund, Mar. 10, 2026)

“Disaster insurance is breaking at a moment of crucial need. As climate change intensifies extreme weather, we’re seeing big shifts in the cost and availability of property insurance.From soaring premiums to fewer options for homeowners, read a few ways we’re feeling the impact across the United States.”

Do You Need Flood Insurance?

Many Homeowners are Surprised to Find That Floods Aren't Included in Home Insurance. Here's What You Need to Know (Fortune, Mar. 7, 2024) E

You should still purchase flood insurance even if you don't live in a high-risk flood zone. Attorney Evan Walker, who represents policyholders with flood damage claims, advises homeowners to purchase flood insurance whether it's required or not, saying, "I've handled cases where clients' homes have flooded because of government negligence, and because the textbook definition of floodwater is outside water coming in, the insurance company refused to cover the damage."

Do I Need Flood Insurance? (MarketWatch Guides, Apr. 8, 2026)

You may need flood insurance if your home is in a high-risk flood zone. FEMA defines a high-risk flood zone as one with at least a 1% chance of experiencing a flood during a full calendar year. If you’re using a mortgage loan to purchase property in an area known for flooding, your mortgage lender will likely require you to purchase flood insurance as a condition of your loan.

FAQ: National Flood Insurance Program Expires September 30, 2026 (National Association of REALTORS®, Feb. 4, 2026)

“NFIP's authority to provide flood insurance is currently set to expire at midnight on September 30, 2026. NAR is making every effort to secure a long-term reauthorization of the program. Here are answers to frequently asked questions about what this means for upcoming closings and several proactive steps your clients can take in the meantime.”

Flood Insurance & Disclosures: What You Need to Know (National Association of REALTORS®, Feb. 21, 2025)

“Flood-related disclosures can generate a deluge of legal and ethical questions. What needs to be disclosed? How should you advise your sellers? What should you tell buyers about flood risk and flood insurance? Former NAR Senior Counsel Deanne Rymarowicz answers these questions and more.”

eBooks & Other Resources

eBooks.realtor.org

The following eBooks and digital audiobooks are available to NAR members:

Contingency Planning and Disaster Recovery (eBook)

Crash Course in Disaster Preparedness (eBook)

Disaster Preparedness Kit (eBook)

The Future of Disaster Management in the U.S. (eBook)

Hurricane Preparation & Survival (eBook)

Real World Survival Tips and Survival Guide (eBook)

The Unthinkable Who Survives When Disaster Strikes--and Why (Audiobook)

Disaster Management and Preparedness (eBook)

How to Insure Your Home (eBook)

Leading People Through Disasters (eBook)

Understanding Disaster Insurance (eBook)

Books, Videos, Research Reports & More

As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.

The Great Deluge: Hurricane Katrina, New Orleans, and the Mississippi Gulf Coast (New York, NY: Morrow, 2006) HV 636 B75

Before and After Disaster Strikes: Developing an Emergency Procedures Manual (Chicago, IL: Institute of Real Estate Management, 2005) HC 62 In7bd

Be Alert, Be Aware, Have a Plan: The Complete Guide to Protecting Yourself, Your Home,Your Family (Guilford, CT: Globe Pequot Press, 2002) HV 7431 R19

Disasters and Democracy: The Politics of Extreme Natural Events (Washington, DC: Island Press, 1999) HV 555 P53

Disaster Preparedness: Simple Steps for Business (Chicago, IL: Crisp Publications, 1998) HF 5500 F87

Disaster Insurance Protection: Public Policy Lessons (New York, NY: Wiley-Interscience, 1978) HG 9970 K96

Disaster Relief and Rehabilitation in the United States: a Research Assessment (Boulder, CO: 1975) HC 62 C71d

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