31 homes on North Carolina's Outer Banks have washed into the sea since 2020 — and insurance may not help

Residents of one North Carolina community have been living what could be described as every homeowner's worst nightmare: having to watch the biggest purchase of their lives get washed out to sea.

After multiple consecutive off-shore hurricanes in recent years, dozens of houses on NC Outer Banks archipelago — specifically Hatteras Island — have been torn to shreds by high tide flooding, which has wrought havoc on the scenic coastal locale.

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Though gradual erosion is nothing new for the area, the destruction has been happening at a vastly accelerated pace in recent months. In February, four houses were lost over the course of just two days. Last autumn was even worse, with five houses succumbing to the waves in less than one hour.

In total, 31 homes on the 50-mile-long island (1) have been forcefully demolished by mother nature since 2020, and many others, preemptively relocated away from the water (2). But the question of how long those homes will be safe remains in the face of what feels like an eventual inevitability (3).

Aside from doing their best to prepare for the worst, what recourse do families have in the face of such natural disasters that cause them to lose everything?

The standard American home insurance policy usually covers (4) damage incurred from fire, tornadoes, winter storms, lightning strikes and more. And, while hurricane wind damage generally falls under the umbrella of disaster coverage, flood and earthquake damage are two big ones that are most often omitted (5), despite flooding being a part of 90% of all natural disasters in the US (6).

Owners and renters can secure separate flood insurance policies from the U.S. Federal Emergency Management Agency (FEMA)'s National Flood Insurance Program (7), which is administered in partnership with private insurance companies.

These policies cover the structure itself, the personal property inside it, or both. The one caveat is that only residents of designated NFIP communities are eligible for protection. Thankfully, there are a whopping 22,600 U.S. towns, cities and counties that participate in the program.

In especially high risk zones, flood insurance is mandatory for homes and businesses mortgaged by government-back lenders. Even if you aren't located in one of these areas, your lender may mandate that you purchase a flood policy anyways. Per FEMA's stats (8), 25% of all successful NFIP claims are from outside of the mapped floodplain.

If your community isn't a designated NFIP participant, you can still access standalone flood coverage from a private insurer. Another alternative is difference and conditions insurance, which is another type of policy designed to augment homeowners' insurance with coverage for hazardous events.

For areas as vulnerable as Hatteras Island (which is, at most, only 3.5 miles wide), residents will likely not be eligible for the latter. And for the former, they would be subject to high premiums.

"Difference in conditions policies typically provide coverage for catastrophic risks like earthquakes, landslides and mudslides, which would include structure losses due to high tides. However, DIC coverage may not be available in coastal places considered as extreme risk," Mark Friedlander, the senior director of media relations at the Insurance Information Institute, told Moneywise.

He added that there is no property insurance that would pay for costs associated with moving a home inland, as some North Carolina residents have had to do.

Like all policies, what you pay for flood insurance varies greatly based on a number of factors.

According to the NFIP quote generator (9), for a 1980-built single-family home of about 2,200 square feet in the Hatteras Island zipcode, $250,000 of building coverage and $100,000 of contents coverage would come with deductibles ranging from the low $1,000s to $10,000.

While the calculator provided us with premiums around the $1,500 mark for this coverage, Friedlander says annual bills would run closer to the $3,000 to $5,000 mark in the Cape Hatteras National Seashore areal, thousands above the national average of $1,122.

Things can get more or less expensive depending on your home's foundation and construction type, number of stories, age, renovation details and if equipment like your furnace, heat pump and air conditioner are stored above a certain height. Elevation certificates (10), issued by local floodplain managers for districts prone to these emergencies, are extremely helpful for these calculations.

Some policies will not only cover structure and contents, but also steps like (11) flood-proofing and loss prevention measures, as well as cleanup after an incident if one does occur.

As the Association of Floodplain Managers states (12), homeowners should always raise their elevation as much as possible during construction and remodeling, or buy a home with as high an elevation as possible, to lower their flood risk.

And, as painstaking as it can be, it is crucial to thoroughly scour the details of your policy and ask questions about relevant coverage up front before signing anything with a broker. It should be kept in mind that NFIP protection takes 30 days to come into effect after purchase.

FEMA recommends (13) documenting all appliances and valuables (with receipts, photos and videos) for potential future claims, flood-related or not, and keeping this documentation and other important paperwork in a safe location far from home in addition to, of course, being aware of your risk before investing in and/or moving into a property.

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We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.

National Park Service (1); The Guardian (2); National Oceanic and Atmospheric Administration (3); Insurance Information Institute (4),(6); Insured Better (5),(11); Federal Emergency Management Agency (7); Franklin Regional Council of Governments (8); FloodSmart (9),(13); Association of State Floodplain Managers (10),(12)

This article originally appeared on Moneywise.com under the title: 31 homes on North Carolina's Outer Banks have washed into the sea since 2020 — and insurance may not help

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.