AILSA CHANG, HOST:
The National Flood Insurance Program will be paying out billions this year floods. Floods for insurers are a risky business. That's why there is government intervention in the market. But some houses are especially risky. A tiny number of insured properties - around 1 percent - have been responsible for about a quarter of the claims paid. Planet Money's Noel King went to one of these homes just outside Houston.
NOEL KING, BYLINE: They're called repetitive loss properties. Jennifer Bayles owns one. This is her third flood since 2009. By now she's an expert with a spiral notebook she jokingly calls "The Book of Life." It's a list of everything she owns for the insurance adjusters.
JENNIFER BAYLES: Front door mat, Revere stockpot. Let's see - 10-inch griddle, 8-inch skillet.
KING: Jennifer made me strap on a respirator before we went inside her house.
BAYLES: I would suggest putting this on.
KING: Oh, I will put this on, OK.
BAYLES: Put your stuff down, and I'll show you the house.
KING: This is a real mask.
BAYLES: Yeah.
KING: OK. Let's see.
Because when the water came up 5 and a half feet, it wasn't just water. It was sewage, too.
BAYLES: This living room was completely full of sewage water and mud.
KING: Oh, God.
BAYLES: But there's a lot of feces in here, too.
KING: Jennifer isn't required to have flood insurance because her mortgage is paid off. But her mom was an accountant for Harris County, and she would come home and tell horror stories about what happened to people who didn't have flood insurance.
BAYLES: It was a no-brainer. It was just a no-brainer. You just have to have flood insurance.
KING: So Jennifer appears to be doing everything right. But when you look at the numbers, something's going very wrong. Jennifer paid $83,000 for this house back in 1992. After the first flood in '09, insurance paid out $200,000. After the next flood - another $200,000. And now, the worst one yet, she expects insurance will pay out about $300,000.
BAYLES: This one will pay out far more than the house and even the land is worth.
KING: When her insurance check arrives in a few months, Jennifer's three-bedroom brick house will have cost taxpayers around $700,000 so far. Here, I'm going to let Carolyn Kousky, who directs Wharton's Risk Management and Decision Processes Center (ph), state the obvious.
CAROLYN KOUSKY: A private insurance company would never keep providing insurance to a home like that. And yet the National Flood Insurance Program doesn't drop anyone and offers coverage to everyone, and so...
KING: So you have situations like this. The National Flood Insurance Program was created precisely because private companies would go broke trying to insure houses like Jennifer's, which Jennifer knows.
BAYLES: Nobody but the federal government would assume this kind of a risk and encourage people to build in a place that you know it's going to flood. And they'll build there 'cause they know it'll be rebuilt over and over and over again.
KING: There are around 30,000 severe repetitive lost properties across the country. We've known since the '90s that these properties are costing us a lot, and there have been efforts to address the problem. There are now federal grants to give people money to elevate their homes. Jennifer's house is constructed in a way that doesn't lend itself to raising. There are also grants to relocate people like her. Buy them out; demolish their houses; return the area to grassland, an idea that Jennifer loves.
BAYLES: The house - I don't care. It could get blown to smithereens, and I'll dance on the ashes.
KING: The grants are hard to get, though. I talked to a lot of people in Houston who'd applied and been turned down, and it can take years to be approved. Before Harvey, Jennifer and her husband thought maybe they just had a couple of unlucky years and that they could sell the house. Now she realizes that probably won't happen. Who would buy it?
BAYLES: It used to be a beautiful place, and all it has done since 2009 is scared the [expletive] out of us every time it rains.
KING: For now, she's not certain of anything except that an insurance check will come again and her house will flood again. Noel King, NPR News. Transcript provided by NPR, Copyright NPR.
