Insurance is failing hurricane survivors: ‘People thought they were covered’
Insurance is failing hurricane survivors: ‘People thought they were covered’
Flooding is separate from typical US home insurance and many homeowners are not adequately covered
Flooding is separate from typical US home insurance and many homeowners are not adequately covered
As millions of US residents begin working to file insurance claims on their homes in the aftermath of Hurricanes Helene and Milton, many could be denied, particularly if their homes were damaged by flooding.
A quirk in the US home insurance market is that flood insurance is separate from typical home insurance, which usually covers wind damage from hurricanes but not flooding. Homeowners must purchase flood insurance separately if they want their homes protected against flooding.
And many don't. In some areas where Hurricane Helene hit the hardest, less than 1% of homes had flood insurance when the storm hit. In Buncombe county in North Carolina, home to Asheville, only 0.9% of homes had flood insurance, according to data from the Insurance Information Institute.
The number of people with flood insurance in Florida, which was hit by Hurricane Milton two weeks after parts of the state were battered by Helene, is higher than in other parts of the country. But still, the take-up is low. In Sarasota county, which took a direct hit from Milton, just 23% of residents have flood insurance.
Insurance companies get away with the most fucked up shit as a matter of course and nobody holds them accountable.
168Insurance companies have a conflict of interest inherent in their business model. They make money by taking your money up front and then paying you back as little as possible at a later date. Any way to weasel out of paying up, especially in a big event like a hurricane, is a huge money saver for them. And most people are desperate. Their house is gone. They aren't in a position where they can argue and sit on the phone for hours and work it out.
72And then, even if they do pay out, they just jack up your rates to make it all back. That's if they don't just drop your coverage completely.
38Also as soon as they pay you out they either jack up the rates to recover what you paid or drop you entirely as you’re no longer profitable. It’s such a massive conflict of interest
16They make money by taking your money up front and then paying you back as little as possible at a later date.
That's not entirely the case. Typically, there is a lag (of a few years) between the payment of premiums and the paying out of claims. Insurance companies invest the premiums in the meantime and profit off the interest/gains from these investments (called the "float"). Well-run (and well-invested) insurers can actually collect less in premiums than they pay out in claims and still be profitable.
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We need some kind of ACA for regular insurance, where unless people are literally building in a swamp or the bottom of a crater near a lake/river they should be just automatically covered.
33Florida is uninsurable, that's kinda the issue.
There's a reason so many big insurance companies have left Florida. And honestly I don't really want even more Federal money going to rebuild in the most common path of ever rising hurricane intensity.
I want Federal funds set aside to move people out of Florida in homes elsewhere for those who want it. If you want to rebuild your house in the path of the hurricane you can do it on your own dime.
76There's a UK scheme called Flood Re that does this kind of thing. If you're more than a certain probability of flooding, you need to go with an insurer that's backed by the government's reinsurance policy.
16So no Florida coverage? As well as a good bit of the south east and new Orleans is swampy.
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Private insurance used to offer flood insurance like 100 years ago, but to stay in business they had to raise premiums to a point where no one could realistically afford it (which is to say that living in a flood zone is not financially feasible for most people). The government had to step in with their own flood insurance program, which was tied to regulation intending to minimize the risk of flooding in at-risk zones so that premiums could remain affordable. Even these measures haven't been sufficient to keep the program from running out of money, and we've been subsidizing it with taxpayer bailouts to keep it afloat.
All this is to say that private insurance is literally incapable of insuring against flood damage, so you can't blame them for any of this. If you want to blame someone, blame Trump for rolling back standards that would have allowed FEMA to consider climate change in their risk models.
21For private insurance, the key is "to stay in business with huge profits" for the gov version, it's politics of course, which you point out. They could easily fund it.
5This is an actual logical take. Don’t live in a flood prone area if you don’t take adequate measures to protect your investments. That’s the customers/citizens responsibility. They aren’t blameless.
Hurricanes aren’t just a climate change issue. They’ve existed in the Florida area long before anyone settled it and many were MUCH more destructive in the past.
My family is from FL. Guess where I don’t live. My house is nice and dry (so is all of their’s but that’s because they got lucky and weren’t directly hit).
Also, read and understand what insurance you actually have. Can’t understand the legalese? Then ask the agent what you are covered for and what you aren’t. It’s really not that hard but some people would rather blame others instead of taking personal responsibility.
I had a partially flooded basement due to a rough monsoon season last year, one window well backed up, and I ended up doing all the work myself since I don’t have flood insurance either (where I live it’s super rare). I’m not blaming anyone but myself for that.
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Their entire business model is fucking people over.
9That would require good governance, appropriate oversight, and consumer activism. Unfortunately Florida man has no interest in these things.
7To be fair... They would have been happy to have sold these people food insurance. How many would have purchased it even if they knew more about it? How keen are you to listen to your insurance company trying to "upsell you shit you don't need?"
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Hmmm, I don't get this. Usually if you're in a flood area the mortgage company requires flood insurance. If you don't get it, they get it for you and send you the bill.
But as most are saying, it's a scam. They will tell you you have flood insurance without mentioning that there are three different kinds of flood damage. Rising water is the one most of us think of, but there is flood damage cause by plumbing issues and finally wind driven water. To a home owner, it's water damage. To an insurance company it's an opportunity to either charge you three times or deny your claim.
It's great!
51Asheville is in the mountains, one of the reasons it was such a big story is that no one expected Asheville to flood. I'm not surprised almost no one up there has flood insurance.
23Flood areas are defined as somewhere where there's a 1 in a 100 chance of a flood happening. The problem is all the calculations for that are based on historic data, which is to say they don't take into account climate change.
9I would expect that it wouldn't be considered a flood zone if it took a hurricane to flood it.
9That's what a coastal flood zone is lol.
Edit:since i'm getting downvoted to hell,
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Water damage to your house is generally covered unless it's specifically excluded (flood). Plumbing leaks are usually covered, and the same goes for wind driven rain.
When it comes to your belongings, coverage is the opposite, meaning nothing is covered unless the policy specifically says it is. Plumbing water damage is covered, but wind driven rain is only covered if an opening is created by the wind or hail. This could be as minor as a missing shingle.
Flood damage (the rising water kind) isn't covered by homeowners insurance for the building or your belongings, but renters policies do typically cover flood damage.
2Some people own their homes and don't have mortgages.
1Yes but it's very few.
1
I had flood insurance for a long time, in a non-flood zone. It was cheap and it made sense since storm water sometimes runs across my back yard.
Until one day I thought we got close to needing to use it. I spoke to somebody at the insurance company and got to know my policy on my own a bit.
It doesn’t matter how bad my house might flood. A flood claim would not matter unless either a 2 acre area flooded or a neighbor’s house had a nice flood claim too.
Lot of fucking good that does for somebody with a small yard who lives on a hill! I actually got rid of the policy years ago.
43It's the dental of home insurance.
We carry flood insurance, it's cheap if you are not in a flood zone.
But the home insurance in Florida is mostly just a scam to suck money out of the state. Company is incorporated, funnels money from policies into the pockets of the rich, then they go bust and fail to pay claims. Then the same people start all over with a different name. While cherry picking policies and leaving the riskier for the state to insure.
If Florida would kick all the insurers out and put everyone on Citizens it would be better. I really only feel "insured" when we fall onto the state plan; and if I had a spare half million you bet I'd self insure and get an umbrella policy for liability, not keep paying those assholes for nothing.
35Yeah, that sounds about right. People think there's a standard "full coverage" and then when something happens, suddenly the insurance company wants to make sure you understand the policy.
Taking those calls must be heartbreaking (though I'm sure the higher ups could care less).
33Yea it's full coverage the way heath insurance is full coverage, eyes, teeth and mental health are not included. It's fucked up
21Another thing to know about ahead of time is replacement cost coverage. I knew something that only had cash value coverage for their roof in addition to an $8000 deductible. They got a check from the insurance for about $200 and had to pay the rest out of pocket.
6That is way too common. With how expensive everything is, people can't afford to really protect themselves. Shit hits the fan and they have a crazy deductible and the most basic coverage because that's probably still $100 a month. You find out that paying your premiums was no better than setting that money on fire every month.
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Insurance fraud cuts both ways.
27Insurance is a straight up scam. In every case.
27Nah, in this case I blame the government for not having clearer regulations and a lack of informational programs.
Maybe all insurance should cover floods - but if we wanted that we'd need to regulate it... these policies were sold without flood insurance and it's quite likely the sellers tried to aggressively upsell them to also get flood insurance.
Maybe the insurance should be government run but we need insurance - health insurance is a scam because it's a fucking fake market, but housing insurance has a healthy market and insurers that reneg on their contract get taken to court and pursued by some truly asshole lawyers... you might argue that falsely denying a claim should come with higher penalties (and I'd agree) but half our government thinks regulations are the fucking devil.
Insurance is an inherently good idea - if we shuffled things up so that none of these people had any insurance then we'd have foreclosures and homelessness across the south right now - insurance companies are dicks but insurance is a good thing to have.
13I live in a place with essentially zero chance of major flooding, but of course there are local floods. In addition to my homeowners policy, I would have to buy three separate coverages for various type of water damage, and at what seems like ridiculous cost for my area and relative to the rest of coverage. I Believe I can’t even get one of the coverages unless I have a sump pump, but my basement is almost always dry so that makes no sense: if I get water in the basement once every decade, what are the chances of a sump pump working after sitting a decade?
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How the heck is that even possible? I was forced to get flood insurance on a house that's nowhere near an ocean just because there is a stream nearby that almost never even has water in it. Getting a damn LOMA processed is confusing as all hell. Do 90+ percent of people not have a mortgage or something?
24That's so weird because my house is literally on a lake and I didn't have to get flood insurance. I had to look up all of the flood maps and saw that the chance of flooding is once every 1000 years.
NOAA (I think) updated flood predictions and the flood line moved slightly toward my house. Still no flood insurance required.
13Mine and flooded twice in the last 4 years. Last time I got a sump pump out in, both time insurance would not help and I can't get flood insurance as I'm not in a flood zone. FEMA helped me out both times though.
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Some of those people who did have flood coverage will only have it because they have a mortgage and were legally obligated to buy it as a condition of getting a mortgage (that is, it protects the mortgage lender's equity). It looks like the federal government requires people who live in a flood risk area and get a federal mortgage to buy flood insurance, for example:
https://sgp.fas.org/crs/homesec/R44593.pdf
An area of specific focus on the FIRM is the Special Flood Hazard Area (SFHA). The SFHA is intended to distinguish the flood risk zones that have a chance of flooding during a “1 in 100 year flood” or greater frequency.
Any federal entity that makes, guarantees, or purchases mortgages must, by law, require property owners in the SFHA to purchase flood insurance, generally through the NFIP.
15What insurance company in its right mind is offering flood insurance during a climate apocalypse?
8What would actually happen if there was $100,000 of damage or more to like 100,000 houses in that area. FEMA only pays less than $50k. And according to the studies they always talk about, most people don't have $50k to fix their house. Would they just be homeless? The mold growth from all that water would make the houses unlivable.
6Sounds like the preexisting conditions situation. We need Obama 2.0 to make Obamainsure
5But but but FEMA!
4Insurance was always a last case resort and not submitting claims because of a paint chip. Now that climate change is showing its face and you built along a beach which everyone has warned you about and needs constant replenishing. Sorry if I am having a little trouble finding some empathy here.
4Note that a lot of the people that are in trouble this time are hundreds of miles inland in mountains.. .
9Climate change affects the entire planet. I was simply pointing the most obvious example. What happened in west NC is tragic but this is the new reality we face and the entire south and eastern coast line requires a rethink of how we insure and more importantly how we build in the future.
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Here is a bit of a different take. The entire economy is based on businesses taking risk. Every start up is a risk, and the majority fail. But that is what you have to do in business to get ahead. Now translate that to something like flood insurance. Would a sartup business pay for that if it wasn't required. No way. They would say if it happens the business just fails. So costs and pay are based on the same concept. Some people would end up destitute in retirement if they paid for all the insurance they should have.
2Insurance has always been a scam brought by English scumbags.
1“Stupid people get screwed by their own stupidity. News at 11.”
Obviously this is a shit system, but you don’t live in Florida and not buy flood insurance, or at least know that you should, because you did your due diligence when deciding to become a homeowner. The solution is absolutely stupid and unfair, but it DOES exist. Until we get a better system in place, people who chose not to avail themselves of the currently available solution made their bed.
-21I understand the sentiment, but that's too many people without flood insurance for it to be called "their own stupidity". 20% of the population can be stupid. Maybe 50%. But 99.1%? Nah, they got scammed
15I respectfully disagree. I don’t think government flood insurance is a scam. I think the government offers it so people don’t get scammed by these craptacular private insurance companies.
6One nuance and rather deceptive point of the article is the statistics only apply to "some" areas, not the whole. The people in NC, which is where that less than 1% comes from, those people got screwed. The one county they picked out of Florida was 20%. I feel like they just pick and chose the worst examples by county, instead of talking about the overall.
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The only shitty thing is just how expensive absolutely everything has been. People selling their houses because insurance is so astronomically expensive that they can no longer afford to insure it. Of course this whole increase in extreme weather conditions is due to climate change, because we suck, and the planet was going to go through this eventually anyway, but it is mostly because we suck.
On the point of people not knowing they need flood insurance, you are right. Definitely callous, but this has been the norm for decades. The system is unfair, but insurance companies exist to make money, not help you. I don't understand how they wouldn't know this by now, that you need both. Especially in Florida. I remember even after Katrina it was talked about on the news for weeks about this practice.
4I think you hit the nail on the head. Insurance shouldn't be a for profit business.
4You wouldn't believe how ignorant Floridians can be.
Milton's eyewall just passed over us (like Ian just did). I have a friend who's a realtor, and he had people coming in the next day to buy houses in blatant flood zones. None of them on stilts or anything.
I think human beings largely need to learn from experience to really learn anything. Burning their hand, getting bitten, or I guess getting flooded.
3Katrina was almost 20 years ago dude. Peoples memories are like goldfish, you think they cared? The only thing they learned was the president did not like black people.
2Finally. A reasonable fellow lemming with great critical thinking abilities. I salute you, friend.
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