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.
Insurance 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.
And 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.
Also 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
They 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.
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.
Florida 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.
A good use of money and imminent domain. A one time payment to a person and relocating them is also something the US government has experience doing, especially in Florida. Can you imagine the irony of doing it to the white folks who took over the region?
But seriously, it is an actual good idea. It would save billions in the long run and would be a good use of effort to reduce the risk of more people going broke from random weather.
Not sure how we relocate basically everyone in the South though. And what about tornado alley, do we move all those people also? And then you have wild fires and earthquakes, do we move all of California also? I get what you are saying, but getting millions of people to move states or across the country isn’t a simple thing. And what do we do with all the then empty previously “high valued” real estate? I do think we ultimately have to do something as global warming continues to cause humans issues at what seems like an accelerated rate, but we also have an alarming number of people that do not want to address it (or that even deny it happening).
And what about tornado alley, do we move all those people also?
What the fuck about it?
According to NOAA, the total cost of property damage for all tornadoes in 2022 was $700 million.
The damage cost from just Helene is estimated to be $47 billion.
Hurricanes are significantly more destructive than tornadoes.
There’s no place on earth that doesn’t suffer from natural disasters, and it’s foolish to compare hurricanes to the rest. Wildfires can be mitigated somewhat, and earthquakes aren’t predictable, neither of which are true about hurricanes. But hurricanes are going to get more destructive and more frequent as the climate warms, so rebuilding where they’re going to predictably continue to hit is just foolish.
And what do we do with all the then empty previously “high valued” real estate?
What about that too? If people want to continue to build on the path of hurricanes, let them. Just stop using taxpayer money to bail them out.
OK, you’re the one that sounded like you wanted to move everyone. And I don’t think when natural disasters continue to get worse that it’s going to be just hurricanes causing mass destruction. We are eventually going to have the rise of sea levels coming into play, which will of course increase the destruction those hurricanes can create, but also the more water a hurricane like Milton spawning larger tornadoes has to move around inland.
Between 2010 and 2020, tornadoes have cost an average of $2.5 million per storm. The most expensive tornado of all time occurred on May 22, 2011 in Joplin, Missouri, costing $2.8 billion dollars in insurance claims and a total cost of damages around $3.18 billion.
What about that too? If people want to continue to build on the path of hurricanes, let them. Just stop using taxpayer money to bail them out.
Your stance that its OK for taxpayers to pay $2.5 million per tornado, but hurricane survivors should be on their own sounds kinda hypocritical.
Not sure how we relocate basically everyone in the South though. And what about tornado alley, do we move all those people also? And then you have wild fires and earthquakes, do we move all of California also? I get what you are saying, but getting millions of people to move states or across the country isn’t a simple thing. And what do we do with all the then empty previously “high valued” real estate?
From your previous post, your answer to your question is: You don’t move them. Instead you skyrocket the rates of insurance on the rest of the nation so that people can continuously have their houses in high risk area destroyed and rebuilt while the rest of the country pays for it. This is what an “ACA for home insurance” would do.
A more realistic approach would be to change the building codes to accommodate specific natural disasters for that geography. You want to build a house in the woods? Now you need a significant fire break around the house and need to build the house out of fire resistant materials if you want coverage. This is discussion of building regulation changes is already occurring. Same thing for houses in hurricane areas. If you want to build there, you have to build houses that will survive there and not be destroyed by the inevitable conditions.
None of this large transition is completed overnight, but it has to start happening now. What we have now is unsustainable.
Whoa whoa whoa, building codes? That’s just costly red tape! How will builders see ever increasing profit margins with all this government bureaucracy?! Remove the building codes entirely, let the Free MarketTM do an invisible handshake with Jesus, and the rest will take care of itself /s
New houses are required to be built to code for hurricane force wind here, the “post-Andrew” building code is good. Most of us don’t have new houses though, my house is from the 1940s, and the one I moved from is 100 years old this year.
We do have building code, what we don’t have is anyone willing to say no to developers. Sprawl, less land to absorb water. I see houses being built on seasonal wetlands, they fill them and raise 'em then the rest of the neighborhood floods in the rainy season. Nobody should be able to do that.
Nobody should be able to do that.
Restricting freedoms too?! You must be one uhv them commi an-tee-fah immigrants takin’ up all our jobs and unemployment benefits! Stay away from our cats! … unless they belong to childless women, then it’s fair game! /S
I think housing like this might be a smarter move than trying to move millions of people (or leaving them homeless).
I think housing like this might be a smarter move than trying to move millions of people (or leaving them homeless).
First, I like those homes, but there’s a HUGE problem with your proposal.
From your linked article:
"But these features come at a cost. According to the community’s website, the homes are selling for $1.4 million to $1.9 million, compared to other new homes in the area priced for at least $600,000. "
Who are you suggesting pays for each person currently in FL to get a $1.4 million to $1.9 million home?
Well I would assume some of that comes from the lower volume of building the homes, with less people in construction in the area possessing the skills/materials to do so. Perhaps if the government put money towards volume buying materials and securing contractors able to build them, the price could come down to “market” values. I would think insurance companies would also see it as a win not having to payout as much for those that can actually be insured (and maybe makes it so more people can actually be covered making the graph go up).
I could be way off and the pricing of those homes are just unable to come down to an acceptable $ value, but government/insurance money would be put to better use looking to build more future climate safe homes as close as possible to the above model instead of today’s standard.
Climate disasters are not affecting the world equally everywhere. Hurricanes are far and away the most destructive climate related disaster and they disproportionately affect Florida of all US states
Hurricanes are far and away the most destructive climate related disaster and they disproportionately affect Florida of all US states
It would say drought would be a climate related disaster more destructive than hurricanes.
It’d probably be excellent to deny claims for anyone intending to rebuild instate and make it clear to those that do that they’re fucked.
There’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.
That’s basically how US flood insurance works. The entire country is mapped out in flood zones based on a every 100 year occurrence. If you’re in the zone you’re required to buy insurance… but it’s bullshit. They have a bunch of inland people paying the same rate as the people’s houses that are on the coast and flood every 5 to 10 years.
So no Florida coverage? As well as a good bit of the south east and new Orleans is swampy.
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.
For 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.
This 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.
I think you’re missing the part where places flooded that have never flooded before. Places that never even saw a hurricane. Unless you plan on moving everything to the tops of mountains, or the middle of an empty plain, anything can flood when enough water hits it.
I’m not missing that. Florida is barely above sea level. I’m not talking about inland North Carolina here. That was truly nuts for all.
Their entire business model is fucking people over.
That would require good governance, appropriate oversight, and consumer activism. Unfortunately Florida man has no interest in these things.
To 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?”
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!
Asheville 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.
Flood 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.
I would expect that it wouldn’t be considered a flood zone if it took a hurricane to flood it.
That’s what a coastal flood zone is lol.
Edit:since i’m getting downvoted to hell,
Asheville is in the mountains
Which is not the same as a flood zone. A costal flood zone is super vague and covers an extremely large area. The bar for requiring insurance is rightfully not that low.
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.
Some people own their homes and don’t have mortgages.
Yes but it’s very few.
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.
It’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.
Yeah, 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).
Yea it’s full coverage the way heath insurance is full coverage, eyes, teeth and mental health are not included. It’s fucked up
Another 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.
That 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.
Insurance fraud cuts both ways.
Insurance is a straight up scam. In every case.
Nah, 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.
How can insurances make billions of profit if it isn’t a scam?
Isn’t it supposed to be a system to share the cost of damage, not to rip off people?
Yup, it certainly rakes in excessive profits - but the core concept of insurance isn’t a scam. It’s a good idea that gets abused in the American market.
I 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?
Close to 100% if you follow a normal maintenance schedule. For a place where it’s rarely needed, that’s once a year. For a place where you get a lot of snow or rain, you inspect, clean, and test it every quarter. If it has sealed bearings, that takes all of 5 minutes.
I’m surprised by the number of homeowners I know who don’t routinely inspect their roofs, water heaters and HVAC, or plumbing, or at least pay someone else to do it if they aren’t willing to spend a couple hours one time making a checklist and watching a few YouTube videos to learn how to do it themselves. They don’t even glance at their roofs from the ground after a big storm to see if there was any damage (I’ve pointed out missing shingles before). It honestly takes maybe 4 hours a year to do preventative home maintenance, and keeps you from having to spend thousands of dollars doing repairs and replacements.
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?
That’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.
Mine 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.
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.
What insurance company in its right mind is offering flood insurance during a climate apocalypse?
What 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.
Sounds like the preexisting conditions situation. We need Obama 2.0 to make Obamainsure
But but but FEMA!
Insurance 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.
Note that a lot of the people that are in trouble this time are hundreds of miles inland in mountains… .
Climate 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.
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.
