Flood insurance

If you have it, what did you think of your recent letter from the Flood
Insurance Processing Center concerning the new $urcharge$? Especially on
property you personally don't live in full time? I was not pleased.
Reply to
KenK
I was in a seminar last year about this. The flood program is hemorrhaging money and they are trying to stem the flow. They want massive rate changes across the board on at risk properties but they are starting with rate increases on 2nd homes, investment property and new homeowners. They would really like to get rid of all of the pre FIRM properties that are not compliant. There are going to be a lot of people who get a "deal" on a house and then they get the insurance bill.
Reply to
gfretwell
That's what I thought was behind it. After events like Sandy, like all insurance companies, they are hiking the rates to close the gap. Starting with second homes that one doesn't occupy, new purchases, sounds like a reasonable start. A lot of these properties are in areas that are known to flood, flood regularly, etc. Somebody has to pay for it and it seems that people that need that insurance should be the ones. For the record, I had a Sandy claim, eventually got $12K out of Allstate after a *lot* of hassling them. They increased my rate, it's now double what it was just a few years ago. They'll recover their money in about 8 years. And that's the only claim I had in 20 years.
Reply to
trader_4
...
From some reading had done on the rate calculations in place, the amazing thing is that apparently none of them actually had the actuarial acumen to price in "common cause" events into their rate structure but was basically done with the assumption of statistical independence for each property.
Hence, when an actual large event showed up, and essentially their entire client base in a large geographical are got hit at one time, that "broke the bank".
Hard to imagine the naivete that would lead to such, but that's what a survey paper on the post-mortem effects for the insurance companies as a whole concluded. I can't recall just where I saw that now; in one of the academic journals, not regular new outlet or the WSJ or the like...
Had a statistician colleague in the group with me at former job wherein our work was primarily "statistical engineering". He had come from a number of years with United airlines and had uncovered similar errors in some of their scheduling models that each airport was treated independently in the sampling of a Monte Carlo simulation.
Reply to
dpb
It is the danger you run into when the government runs an insurance program. The rates become a political issue, not an underwriting issue. Now they are trying tho thread the needle between what it will take to fund the program and what is politically viable.
Reply to
gfretwell
I and the paper I was referring to relate solely to the commercial underwriters, not government flood insurance (altho I've never studied it, my first inclination would be to guess it likely never was actuarially-based at all, or at least minimally so).
Reply to
dpb
It's ironic how the very people who fulminate against government-subsidized health insurance simultaneously demand that the government continue to subsidize their property insurance.
Reply to
Moe DeLoughan
As far as I know, all flood insurance in the US is underwritten by FEMA, although it is sold by commercial companies.
Reply to
gfretwell
Insurance in general is a crooked business. Their only concern is filling their pockets. Just like politicians, there are lots of promises, but when you need them, they dont come thru. They know how to word their paperwork so they always end up screwing the customer.
I get a laugh out of these Life Insurance companies who brag that EVERYONE IS APPROVED. THey make it sound like they're doing you a favor. WRONG,,,,, they just want your money and know how to bullshit people till they get it.
And now that we're FORCED to have auto and medical insurance, these companies can do whatever they damn well please. I have a real problem with FORCING people to do business with private companies. I think it's unconstitutional, but I wont say anymore, or this will turn into a political thread, adn this is the wrong newsgroup for that crap. But as long as the govt continues to kiss the ass of insurance companies, we will continue to lose our freedoms. I'm seeing many wholesome forms of entertainment having to shut down their events because they cant afford the insurance.
Reply to
Jerry.Tan
Per economics 101 that's the concern of virtually all businesses, to maximize profits.
Just like politicians, there are lots of
They finally did come through for me. I'm satisfied with what I finally got out of them, but it took a lot of bitching, 3 visits by adjusters, couple months to get it resolved.
I'm a conservative, but I don't have a problem with requiring people to have auto and health insurance. If you drive a car, cause an accident, you should be able to pay for the damage you caused the other party. Without insurance, most people could never collect against someone who caused the accident. Same thing with healthcare. If you don't have insurance, wind up in the emergency room, everyone else winds up paying for you. I don't see anything incompatible with requiring people to have health insurance to cover major events like that. That's not to say that the way the govt went about it is right. I think most of the implementation is wrong.
In general, I don't have anything against insurance companies, I don't think they are evil, etc. It's like any industry, some are better than others, etc. The insurance companies had to pay out a lot with huge disasters like Sandy. The money has to come from somewhere.
Reply to
trader_4
Exactly, and there are many communities that are quite simply built in stupid places, ie. below sea level, flood plains, etc. There is nothing wrong with choosing to live there, but expecting cheap insurance for *when* the problem arises is nuts.
Reply to
FrozenNorth
We live in a very nice newer home that was not in a flood plain when it was built. Unfortunately our home and several others are now in a flood plain simply because they moved the flood plain boundaries. There has NEVER been a flood where our home is but the boundaries were still moved to encompass it and others. We do not have a mortgage on our home thus we are not required to have flood insurance and we do not have flood insurance nor will we purchase it in the future.
Our only problem is that if we sell the home we will probably need to find a cash buyer because if the buyer has to have a mortgage the lender will require that they have flood insurance which will no doubt be expensive. This fact will obviously limit our number of possible buyers.
Don't ask me exactly who changed the flood plain boundaries because I do not know for sure without doing some digging. OTOH - I do believe it was the Corps of Engineers but again, not sure.
Reply to
IGot2P
...
But hurricane is a rider to homeowners' policies, _not_ flood insurance. That's where the commercial underwriters got in so much trouble.
So, kinda' switched horses, yeah..., sorry. :)
Reply to
dpb
Yeah, it's a mess for the homeowner almost always when there are multiple carriers/policies so they can point at the other.
Not all tried to be the most difficult they could be, but all in the region were well over-extended owing in large part to the aforementioned neglect of common-cause in underwriting large-scale risk which was the subject of the analysis...
But, even the best of carriers when pushed to extremes on financials is likely to begin to look at how to minimize the pain.
Reply to
dpb
Wasn't that an out for some companies ? If the wated did the damage they did not pay as it was a flood. It had to just be the wind. Or some kind of way out like that.
Reply to
Ralph Mowery
It depends on where the water came from. If the roof blew off or windows blew out and rain poured in, then typical homeowner policy covers the water damage. If water from the ocean, bay, stream, whatever flooded the house, then they won't pay, unless you have flood insurance which is separate coverage. Then there are some cases where it's more complicated, ie roof blew off, gas line broke setting place on fire as flood waters were raging. Good luck sorting that out....
Also typical homeowner policy, maybe all of them, have hurricane deductibles of 5%. That's what mine was. But we got very lucky here because Sandy managed to lose just enough steam that when it came ashore at Atlantic City, it was no longer a hurricane. Otherwise, instead of getting 12K in insurance payment, I would have gotten zero.
Reply to
trader_4
So with the wind speed dropping say 20 MPH it was not a hurricane and just a tropical storm or some such thing. Then you had a flood instead of wind damage..
I live in the middle of NC and where I used to live it was about 200 feet higher than most of the county. Wife asked if we had flood insurance after seeing some ads on TV. Told her if we got flooded we needed the Ark instead of insurance.
Moved a few years ago and about 100 feet from the house is a small creek that is about 1 foot deep and 2 feet wide most of the time. When we have a very hard rain for a couple of days it overflows and comes out about 20 feet from the creek. I am not worried about that as the house is on land that is about 20 feet higher than the creek.
Reply to
Ralph Mowery
On Tue, 13 Jan 2015 15:40:58 -0600, IGot2P wrote:
FEMA
They analysed places where they had claims and it wasn't a designated flood plain and then extrapolated that to anywhere that looked similar on a topographical map. You can file a letter of appeal and if you and your neighbors are willing to pay for an engineering study that backs your claim, you might win. It has happened here is SW Florida several places.
Reply to
gfretwell

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