By Jed Kim

Last year, when Hurricane Matthew was spinning havoc in the Atlantic, Virginia Wasserberg’s house was spared gale-force winds, but the hurricane brought storm surge into her home.

“The entire first floor of the home suffered about 18 inches of flood water,” said Wasserberg, who lives in Virginia Beach, Virginia. Much of the loss had sentimental value. “Some items that were irreplaceable — things that were given to us from family members that had passed away,” she said. “You’re not going to recover those items again.”

But other things had clearly defined value, like furniture, electronics and appliances. Her family suffered more than $100,000 in damages. She and her husband rebuilt their home using a combination of personal savings, loans and payouts from the policy they had through the National Flood Insurance Program. For them, moving wasn’t an option…

…“The problem is not that [homeowners] rebuild, but the problem is that they don’t face actuarially fair prices for insurance,” said Michael Greenstone, a professor of economics at the University of Chicago. “In that sense, the rest of us — the people who don’t live in those flood zones — are subsidizing people who want to live in flood zones.”

He said the low NFIP premiums for homes in floodplains are insufficient to cover the program’s actual costs. Then, when disaster hits, taxpayers make up the gap…

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