On Tuesday morning, five days after Hurricane Helene ripped through Boone, North Carolina, David Marlett was on his way to the campus of Appalachian State University. The managing director of the university’s Brantley Risk & Insurance Center, Marlett was planning to spend the day working with his colleagues to help students and community members understand their insurance policies and file claims in the wake of the storm. He didn’t sound hopeful. “I’m dreading it,” he said. “So many people are just not going to have coverage.”

Helene made landfall southeast of Tallahassee, Florida, last week with winds up to 140 miles per hour, downing trees and bringing record-breaking storm surges to areas along the Gulf Coast before charging up through Georgia. But perhaps its most shocking impacts have been on inland North Carolina, where it first started raining while the storm was still over Mexico. At least 57 people are dead in Buncombe County in the west of the state alone. Communities like Boone received dozens of inches of rainfall despite being hundreds of miles from the coast. Waters rose in main streets, sinkholes and mudslides wreaked havoc, and major roads were blocked, flooded, or degraded by the storm.

Now, there’s a good chance that many homeowners in North Carolina won’t see any payouts from their insurance companies—even if they have policies they thought were comprehensive.

“The property insurance market for homes was already a patchwork system that really doesn’t make a lot of sense,” Marlett says. “Now you’re adding in the last couple of years of economic uncertainty, inflation, climate change, population migration—it’s just an unbelievably bad combination happening all at once.”

For North Carolinians, the issue right now has to do with what, exactly, private insurance is on the hook for when it comes to a storm. An average homeowner policy covers damage from wind, but private homeowners’ insurance plans in the US do not cover flooding. Instead, homeowners in areas at risk of flooding usually purchase plans from the National Flood Insurance Program (NFIP).

The way a hurricane wreaks havoc on a state is a crucial deciding factor for insurers’ wallets. Hurricane Ian, which hit Florida as a category 4 storm with some of the highest wind speeds on record, caused $63 billion in private insurance claims. In contrast, the bulk of the $17 billion in damage caused by 2018’s Hurricane Florence, which tore up the North Carolina coast, was water damage, not wind; as a result, private insurers largely avoided picking up the check for that disaster.

This breakout of flood insurance from home policies dates back to the 1940s, says Donald Hornstein, a law professor at the University of North Carolina and a member of the board of directors of the North Carolina Insurance Underwriting Association. Private insurance companies decided that they did not have enough data to be able to accurately 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 says.

While the NFIP, which was created in the late 1960s, provides virtually the only backup against flood damage, the program is saddled with debt and has become a political hot potato. (Project 2025, for instance, recommends phasing out the program entirely and replacing it with private options.) Part of the problem with the NFIP is low uptake. Across the country, FEMA statistics show that just 4 percent of homeowners have flood insurance. Some areas hit by Helene in Appalachia, initial statistics show, have less than 2.5 percent of homeowners signed up for the federal program.

“Even in coastal areas, not many people buy that, much less here in the mountains,” Marlett says. “People have never seemed to fully understand that flood is a separate policy.”

Flooding is not unprecedented in the mountains of North Carolina: Hurricane Ivan swept through Appalachia in 2004, and flash floods from rivers are not unheard of. Purchasing flood insurance is mandatory with a government-backed mortgage in some areas of the country, based on flood zones set by FEMA. But the data is based on extremely outdated floodplain maps that have not taken the most recent climate science on record rainfall into account.

“The biggest non-secret in Washington for decades is how hopelessly out of date these flood maps are,” Hornstein says.

Even if water wasn’t the cause of destruction for some homeowners in North Carolina, the storm’s disastrous mudslides—another risk supercharged by climate change—may not be covered either. Many home insurance policies have carve-outs for what are known as “earth movements,” which includes landslides, sinkholes, and earthquakes. In some states, like California, insurers are mandated to offer additional earthquake insurance, and homeowners can purchase private additional policies that cover earth movements. But in a state like North Carolina, where earthquake risk is extremely low, homeowners may not even know that such policies exist.

It’s also been a tough few years for the insurance industry across the country. A New York Times analysis from May showed that homeowners’ insurers lost money in 18 states in 2023—up from eight states in 2013—largely thanks to expensive disasters like hurricanes and wildfires. Payouts are increasingly costing insurers more than they are getting in premiums. Homeowners are seeing their policies jump as a result: According to statistics compiled by insurance comparison shopping site Insurify, the average annual cost of home insurance climbed nearly 20 percent between 2021 and 2023. In Florida, which has the highest insurance costs in the country, the average homeowner paid over $10,000 a year in 2023—more than $8,600 above the national rate.

Florida has made headlines in recent months as ground zero for the climate-change insurance crisis. More than 30 insurance companies have either fully or partially pulled out of Florida over the past few years, including big names like Farmers’ and AAA, after mounting losses from repeated major hurricanes like 2022’s Ian, the most expensive natural disaster in the state’s history. Florida’s insurer of last resort, now saddled with risk from multiple homeowners, has proposed a rate increase of 14 percent, set to go into effect next year.

In comparison, North Carolina’s insurance market looks pretty good. No insurers have exited the state since 2008, while homeowners pay an average of $2,100 per year—high, but avoiding the sky-high rates of states like Florida, California, and Texas.

“What traditionally has happened is that there’s a rate increase every few years of 8 to 9 percent for homeowner’s insurance,” says Hornstein. “That has kept the market stable, especially when it comes to the coast.”

But as natural disasters of all kinds mount, it’s tough to see a way forward for insurance business as usual. The NFIP is undergoing a series of changes to update the way it calculates rates for flood insurance—but it faces political minefields in potentially expanding the number of homeowners mandated to buy policies. What’s more, many homeowners are seeing the prices for their flood insurance rise as the NFIP adjusts its rates for existing floodplains using new climate models.

Many experts agree that the private market needs to reflect in some way the true cost of living in a disaster-prone area: in other words, it should be more expensive for people to move to a city where it’s more likely your house will be wiped off the map by a storm. The cost of climate change does not seem to be a deterrent in Florida, one of the fastest-growing states in the country, where coastal regions like Panama City, Jacksonville, and Port St. Lucie are booming. (Some research suggests that the mere existence of the NFIP shielded policyholders from the true costs of living in flood-prone areas.)

Asheville, at the heart of Buncombe County, was once hailed as a climate haven safe from disasters; the city is now reeling in the wake of Helene. For many homeowners, small business owners, and renters in western North Carolina, the damage from Helene will be life-changing. FEMA payouts may bring, at best, only a fraction of what a home would be worth. Auto insurance generally covers all types of damage, including flooding—a small bright spot of relief, but not enough to offset the loss of a family’s main asset.

“People at the coast, at some point after the nth storm, they start to get the message,” Hornstein says. “But for people in the western part of the state, this is just Armageddon. And you can certainly forgive them for not having before appreciated the fine points of these impenetrable contracts.”

Marlett says that there are models for insurance that are designed to better withstand the challenges of climate change. New Zealand, for instance, offers policies that cover all types of damage that could happen to your house; while these policies are increasingly tailored price-wise to different types of risk, there’s no chance a homeowner would experience a climate disaster not covered by their existing policies. But it’s hard, he says, to see the US system getting the wholesale overhaul it needs, given how long the piecemeal system has been in place.

“I sound so pessimistic,” he said. “I’m normally an optimistic person.”

Updated 10-2-2024 10:00 pm BST: The date of Hurricane Ivan was corrected from 2024 to 2004.