Flood Insurance

[mjarrels]

I heard today that only 9% of the midwest homes had insurance... I am shocked that folks who don't carry insurance! Did we not learn something from Katrina?

mark

 

[bigshovel]

That is not surprising to me. If it were on the coast and the ocean was in view I could picture them being able to afford insurance. Being in middle class America it was probaly out of reach for most. A few friends and I own a getaway hunting camp near a major river that floods frequently, flood insurance for that structure only is 4300 bucks a year. Pretty steep seeing that we can rebuild the square footage every five years almost for that kind of money. We gamble, on year 11 and no problems yet. My heart goes out to all of those suffering in the mid west and I can't imagine devastation at that level.

Brad

 

[mjarrels]

I have a uncle who has a fishing shack on the north river... washed away many times... now his shack has a cable attached and the old ford tractor pulles it up the hill when flood waters are high... $1500.00 building, not a HOUSE.

mark

 

[bigshovel]

Understood not a house. But, 900 square ft finished we can rebuild on the masonary foundation for 40k. Those homes in the midwest should have been insured but in a lot of cases out of reach due to cost. Alot of insurance companies won't insure new construction in flood plains.

Brad

 

[Bird]

It's always seemed to me that your homeowners insurance should include flood insurance. Yes, that would mean our premiums would be higher, but if everyone who has homeowners insurance were paying, the premiums would undoubtedly be less than some of us are now paying for both homeowners and flood insurance. We're not in a "flood plain", but I learned that this area used to flood years ago before the current drainage ditches and channels were built. I don't expect it to flood again, and in fact, I think if my house ever floods, the water will be even deeper in our local police station. However, I decided to buy the flood insurance; just renewed it last month. I only have $125k flood insurance and it cost $277 for the year.

 

[mjarrels]

I remember when I lived on Whidbey Island WA... use to drive to Seattle sometimes... local river flooded (trash in the trees 10' high)... Yep, putting a moble home on the banks. DUMB people!

mark

 

[dooleysm]

I have a buddy in Columbus, IN that got flooded a few weeks back. He did not have flood insurance, nor did any of his neighbors. The closest body of water is a tiny creek about a half mile away. I don't know if he's in a flood plain or not, but when we drove up there to help him cleanup a few days after the flood I never would have thought he could get flooded. Flooding is just not something that would even cross your mind if you lived where he lives.

On a related note, I checked on earthquake insurance for my house several months ago on a whim. Our current insurance is about $600/year. To add earthquake coverage was about $350/year. Yikes, over a 50% increase! Then about a month after that there was a 5.3 magnitude earthquake centered about 100 miles away that shook us up pretty good. After that earthquake and seeing my buddy deal with the aftermath of a flood with no insurance, I'm re-thinking that earthquake coverage.

 

[MossRoad]

I heard today that only 9% of the midwest homes had insurance... I am shocked that folks who don't carry insurance! Did we not learn something from Katrina?

mark

Did you see those houses along the Wisconsin Dells that got washed away? No flood insurance. They tried to get flood insurance, but FEMA and the local village could not come to an agreement, so flood insurance was not available to them, according to one of the homeowners that had his house and most of his land swept away. They took a gamble by living next to a man-made lake and having no flood insurance and lost. Now they have a huge mortgage payment that is still due. Most likely they will declare bankruptcy and write it off, which will increase the costs for the rest of us.

 

[tallyho8]

Flood insurance is cheaper than fire insurance in almost all areas. There are some who build on the banks of a river that typically overflows every few years, and know that their home will eventually flood, and then complain about the high cost of their flood insurance. Naturally, if you build where it normally floods the insurance company will charge more for flood insurance.

The situation that most people are in though is that they are not located in an area with frequent flooding so their mortgage company does not require them to have MANDATORY flood insurance, so they presume they are safe from flooding and do not get insurance.

When New Orleans flooded after Katrina, people around the country were shocked to hear that most New Orleanians did not have flood insurance, but much of this area had never flooded in the 300 year history of this city and the citizens did not expect it. The same thing is now occurring in the Midwest.

When homes were blown apart by Katrina winds and then the area flooded afterwards, people's homeowners insurance didn't pay off because they claimed the homes were destroyed by flood instead of wind. In areas where an earthquake hits and causes a home to burn down, the insurance company doesn't pay off if the people don't have earthquake insurance because they claim the fire was caused by an earthquake. The only way to stop these insurance squabbles is to make homeowners insurance cover ALL disasters and not make you get different insurances for different losses to your homes so that they can debate which disaster caused your loss. If every home had all peril homeowners insurance it would spread the risk and most peoples insurance cost would not be raised significantly.

 

[LMTC]

If every home had all peril homeowners insurance it would spread the risk and most peoples insurance cost would not be raised significantly.

Depends on what you call "significantly". I don't like the idea of socialized anything, and that would amount to socialized insurance. Pay for the peril depending on the risk. Now if flood insurance isn't available where you live and you suffer a flood, that's a different issue, and has more to do with government interference than anything else.

Insurance companies need to be free to offer flood insurance to anyone. I would probably buy it, because the cost would be negligible where we sit, and the potential loss if it actually happened would be staggering. I bought earthquake insurance when we built, just because we are along the lines affected by the New Madrid fault (though 400 miles away), and it is not expensive for me.....but the consequences if impacted by an earthquake could be devastating.

We likely will all bear some of the costs indirectly no matter how this plays out, but bearing them directly (in terms of governmental remittance to those affected) just doesn't sit right with me. Until I am given some control over other people's choices about assuming risks, I remain opposed to paying for the consequences.