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.
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.
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.
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
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.
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.
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).
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.
Per economics 101 that's the concern of virtually all businesses, to
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.
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.
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.
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.
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.
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
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
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.
On Tue, 13 Jan 2015 15:40:58 -0600, IGot2P
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.