Katrina Victims SOL

[Chaos]

Read the policy, check the amounts, and make sure you understand it.

Obviously I can't speak for your aunt & uncle, but in my parents case, I pointed out to them that they were renewing a flood policy that no longer covered them for the full value of their home. The property value had steadily gone up, but their flood policy had stayed at the same coverage amount because they weren't checking it each year and their lazy agent wasn't noticing it either. So if there had been a flood and the house was completely destroyed, they would have come up short in their coverage.

In our case, I've always made sure that I have more flood coverage than my property's current value, just to be sure. For me, the difference in premiums for just enough coverage versus $30,000 over my current value is only 20 or 30 dollars a year, IIRC.

I second everything TragicMonkey said. I have also worked in insurance business (household and homeowner, specifically) and was about start writing a post stating more or less the same (s)he did.

Also, in Germany at least there are provisions both for household and homeowner insurance to avoid being underinsured. I have no idea if anything similar exists in the US and will thus defer to TM to tell us.

For homeowners´ insurance, your house is insured not at its actual current value, but at a calculated value that represents what it would have cost to build your house in in a specific year (1912 or 1918). This is mainly to prevent underinsurance through rising construction cost, but it also means that, if calculated value is determined properly when the policy is taken out (and there is a very specific definition to "determined properly"), then as you as you do not make improvements or additions to the house, no deductions will be made for underinsurance.

Four household insurance, there is a provision that, as long as the insured sum is at least at a certain minimum level (back then it was DM 1,200 per square meter - in US terms maybe $80 or so per square foot), no deductions for underinsurance will be made.

 

[Jocko]

SOL? BFD.

Caveat emptor, read the friggin' fine print, just like every other friggin' adult in the world is expected to do. Sheesh.

 

[TriangleMan]

Okay, I spent some time in the insurance industry. Flood is not covered in 99.99% of homeowner policies. The reason is because flooding, unlike house fires, lightning strikes, or tornados, is going to affect a lot of houses all at once. Hurricanes do, too, but given decent construction and placement of trees, some houses will survive better than others. The risk is manageable. Flooding, however, is going to damage 100% of the houses, 100% of the time.

I think most reinsurers don't provide flood coverage for this reason as well, so there is even less incentive for an insurance company to write the business. No insurance company wants to take on property catastrophe risks without reinsurance.

 

[Katana]

Which is why there is separate, government-sponsored flood insurance. It is recommended for everyone, regardless of whether you live in a flood-prone area or not. Why? Because if a flood does hit, you're screwed. Your house will be very, very, very damaged. Without flood insurance, you are likely looking at financial disaster ranging up to total and utter ruin. It is in the interests of the people to have access to flood insurance. Which is why the government strongly encourages you to participate in the cheap, guaranteed-available flood insurance program. It is cheap because nobody is running it for profit. It's a necessity run for the benefit of all who have the brains to take advantage of it.

I wasn't aware of this. How do I find out more about the government program? Is it better, worse, comparable coverage than that provided by a private insurer?

Thanks.

 

[TragicMonkey]

I wasn't aware of this. How do I find out more about the government program? Is it better, worse, comparable coverage than that provided by a private insurer?

Thanks.

Um, I think the government program is what's behind the private insurers. I forget how it works, exactly, it's been a while since I was in insurance. I think it's actually a thing where the insurer simply acts as agent for the govt's flood insurance program.

Here's what my state's State Corporation Commission says about flood insurance:

Generally, flood insurance is not sold by private insurance companies, and coverage for this peril is not covered under most property insurance policies. This coverage may be available for property other than buildings, however, under motor truck cargo insurance policies, "all risk" transportation forms, and bailees' customers' policies. The federal government sells insurance for direct flood and flood-related damage including mudslide and erosion under the National Flood Insurance Program (NFIP). Some companies also offer policies through the NFIP in their own names under the "Write Your Own" program. For more information, contact your agent or call the National Flood Insurance Program at 1-800-638-6620.

If you're not familiar with a State Corporation Commission (it's called different things in different states, but they all have one), it's the body of state government that is in charge of regulating everything that's state regulated, including insurance. They're the ones to go to for info on stuff like this. (Only in this particular case, flood being federal, they tell you to go elsewhere.)

 

[Beerina]

Given all this, quite frankly I'm shocked the policies along the Gulf don't explicitely call out whether "hurricane damage" is covered or not. Clearly that's separate from normal river-based flooding, or normal storm high winds.

 

[Molinaro]

I think there is room for appeal. If I read the story right, the judge says that the policy is worded in such a way that wind damage is covered, but water damage is not covered. Which leads to the following:

- wind blows your roof off ---> covered

- rain falls into house through missing roof causing extensive water damage ---> not covered

The judge says that kind of situation should not be allowed and the subsequent water damage should be treated as having been caused by the wind. Although that exact circumstance did not apply to the case he was judging.

 

[Katana]

If you're not familiar with a State Corporation Commission (it's called different things in different states, but they all have one), it's the body of state government that is in charge of regulating everything that's state regulated, including insurance. They're the ones to go to for info on stuff like this. (Only in this particular case, flood being federal, they tell you to go elsewhere.)

Thanks for the info! I'll look into it.

 

[WildCat]

Obviously I can't speak for your aunt & uncle, but in my parents case, I pointed out to them that they were renewing a flood policy that no longer covered them for the full value of their home. The property value had steadily gone up, but their flood policy had stayed at the same coverage amount because they weren't checking it each year and their lazy agent wasn't noticing it either. So if there had been a flood and the house was completely destroyed, they would have come up short in their coverage.

This isn't correct. The property is not going to be destroyed in a flood, even if the house is washed all the way to Mexico. What you want to insure is the cost to rebuild the house. This may go up because of inflation and new building codes, but not because of a rise in property values.

 

[WildCat]

Of course, these jerks probably knew damned well they weren't covered, but were too cheap to pony up the awesome sum of a couple hundred bucks a year to protect their most valuable asset, and they hoped they could cheat their insurer to cover their cheap fraudulent butts.

Is it really only a few hundred bucks a year on land that is below sea level in a hurricane zone?

 

[Quinn]

Apart from the fact that I got out beforehand and I didn't die and neither did any of my friends, there are not many ways in which I feel I "got lucky" with regards to Katrina. But one stroke of luck was that my renter's insurance was among the (apparently) 0.01% that specifically did include flood damage. It only covered about a third of what I lost, but that's a damn sight better than none. And the check didn't even bounce.

 

[TragicMonkey]

Is it really only a few hundred bucks a year on land that is below sea level in a hurricane zone?

It depends on how much your house is worth. But it's much cheaper than homeowner's insurance.

 

[KillerBob]

This isn't correct. The property is not going to be destroyed in a flood, even if the house is washed all the way to Mexico. What you want to insure is the cost to rebuild the house. This may go up because of inflation and new building codes, but not because of a rise in property values.

Sorry, I mixed terms a bit using "property" when I should have said property with improvements. And yes, you're right, it is about the replacement costs, but unless you're getting a rebuilding estimate on an annual basis, I always consider the overall valuation of the property and improvements as a decent indicator of how much insurance is needed on the home.

Better to overshoot than underestimate.

 

[Metullus]

Given all this, quite frankly I'm shocked the policies along the Gulf don't explicitely call out whether "hurricane damage" is covered or not. Clearly that's separate from normal river-based flooding, or normal storm high winds.

I have just looked at my mom's policy - mom lives in SE Louisiana.

Her policy has a Hurricane Damage rider. The rider covers all damage caused by hurricane including water intrusion EXCEPT damage arising from storm surge.

 

[Rob Lister]

I think there is room for appeal. If I read the story right, the judge says that the policy is worded in such a way that wind damage is covered, but water damage is not covered. Which leads to the following:

- wind blows your roof off ---> covered

- rain falls into house through missing roof causing extensive water damage ---> not covered

Interestingly, I'm covered from any water damage not specifically due to "rising" water. So, if the wind blows the roof off and water falls "down" into my home, I'm covered.

For those not in the know, an Insurance Contract (and that's what it is) is not only one of the most important contracts you'll ever sign, it is also one of the most clear. There is no fine print and the language is clearly put forth.

 

[BPSCG]

It depends on how much your house is worth. But it's much cheaper than homeowner's insurance.

[shanek]
If I understand correctly, it's relatively inexpensive, even in a flood plain, because it is in one important way, much different from real homeowners' insurance.

Most people have real homeowners' insurance, if for no other reason than that they have either a mortgage and the bank requires it, or they have simple common sense, or both. Everyone bears some risk of loss due to wind, fire, meteorites, vandalism, etc. The cost of those risks are spread out throughout the population at large because, again, most homeowners have the insurance, and the insurance benefits the population at large.

Most people, OTOH, don't have flood insurance. They weigh the risk and the cost vs. the likely benefit, and conclude that it's not worth the expense. Flood insurance is relatively cheap even for people living in flood plains because the people who don't buy it for themselves subsidize the cost of it for those who do, in the form of taxes. here, the cost of the insurance is spread out over the population at large, but it only benefits a small portion of the population.

What would medical insurance rates be like if the only people who bought it were fat chain-smokers? Pretty damned high. Should athletic non-smokers be required to pay the premiums for those people? Or should they be required to bear the cost of their risky behavior themselves?

If the government got out of the flood insurance business and stopped subsidizing the cost of it, and simply let people pay the actual cost of it, it would get very expensive. There are people who've rebuilt their houses several times in the same flood areas, thanks to the federal flood insurance program. If their premiums were $5,000 or $10,000 a year, they might decide not to build on a flood plain. Or else they'd realize that expensive flood insurance is one of the costs of owning a home in a flood area. But if the rest of us taxpayers are going to pay to rebuild their homes for them, why should they? Here's the taxpayer trough, folks, line forms to the left.
[/shanek]

 

[Rob Lister]

[shanek]
If I understand correctly, it's relatively inexpensive, even in a flood plain, because it is in one important way, much different from real homeowners' insurance.

Most people have real homeowners' insurance, if for no other reason than that they have either a mortgage and the bank requires it, or they have simple common sense, or both. Everyone bears some risk of loss due to wind, fire, meteorites, vandalism, etc. The cost of those risks are spread out throughout the population at large because, again, most homeowners have the insurance, and the insurance benefits the population at large.

Most people, OTOH, don't have flood insurance. They weigh the risk and the cost vs. the likely benefit, and conclude that it's not worth the expense. Flood insurance is relatively cheap even for people living in flood plains because the people who don't buy it for themselves subsidize the cost of it for those who do, in the form of taxes. here, the cost of the insurance is spread out over the population at large, but it only benefits a small portion of the population.

What would medical insurance rates be like if the only people who bought it were fat chain-smokers? Pretty damned high. Should athletic non-smokers be required to pay the premiums for those people? Or should they be required to bear the cost of their risky behavior themselves?

If the government got out of the flood insurance business and stopped subsidizing the cost of it, and simply let people pay the actual cost of it, it would get very expensive. There are people who've rebuilt their houses several times in the same flood areas, thanks to the federal flood insurance program. If their premiums were $5,000 or $10,000 a year, they might decide not to build on a flood plain. Or else they'd realize that expensive flood insurance is one of the costs of owning a home in a flood area. But if the rest of us taxpayers are going to pay to rebuild their homes for them, why should they? Here's the taxpayer trough, folks, line forms to the left.
[/shanek]

IMHO, most of your Shanek mode is very well-put.

 

[BPSCG]

IMHO, most of your Shanek mode is very well-put.

Meaning...

• It's well-argued (= good), or;
• I do a good imitation of shanek (= not necessarily...)

?

 

[Rob Lister]

Meaning...

• It's well-argued (= good), or;
• I do a good imitation of shanek (= not necessarily...)

?

Meaning...

I agreed with the argument...more or less.

There's a necessary middle ground, IMO, but it currently extends too far into flood plains.

There's room to discuss the Shanek-mode argument.