Unfortunately, the problems as described here generally (but not always)arise out of two interrelated problems:
1. Not enough insurance to cover replacement cost of a house and it’s contents, and
2. Having to buy a separate insurance policy to cover the peril of flood which has een excluded from homeowners policies since the 60’s, using well tested language.
This itself leads to two problems:
A. two different insurers arguing over what caused which damage and each trying to push as much of the claim as possible onto the other company; and
B. Not enough flood coverage. Unfortunatley the national flood program does not offer limits high enough to cover the value of most houses exposed to floods, and, if the agent even thinks about it, the insured is reluctant to purchase even another policy providing excess flood coverage.
To me the best possible answer includes several facets:
1. Increase the limits available under the national flood program;
2. Charge more realistic rates for the flood coverage. The system now is heavily subsidized by the Feds and is, in fact bankrupt by many billions of $. Those that live in flood plains MUST pay rates commensurate with their exposure to flood loss. After all, why should I, who live many miles in from the coast, have to subsidize rates for those who wish to live on the coast or in recognized flood plains.
2. Make flood coverage from the National Flood Program available as an endorsement to the homeowners policy, with the peril of flood reinsured back to the NFIP.
This gives one insurer covering all the damage, and one adjuster handling everything. It doesn’t solve the allocation of damage between wind and flood, but does mean the insured doesn’t have to fight that battle. The allocations can be done on a case by case basis by the issuing insurer and the NFIP.
This guarantees that, as long as the insured buys proper amounts of insurance, they are made whole, which, after all, is what we are in business for, and they are made whole with the least amount of agony on thier part which also is what we are in business for.
Of course, getting them to buy the proper amount of insurance in the first place is a whole ‘nother problem. And the ones who knowingly don’t buy enough insurance are the ones who scream the loudest when the insurance company tells them they aren’t fully covered.
Excellent comment Temblor. I’m not sure why there wasn’t a huge push to overhaul the NFIP after 2005’s historic hurricane season. I have flood insurance even though I live somewhere that has never flooded and probably won’t ever flood. It’s cheap to insure against and it’s something that I don’t have to worry about now.
There was a push to overhaul NFIP — by adding wind coverage at subisdezed (inadequate) rates. The push was in the wrong direction (IMHO), and was eventually defeated.
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Unfortunately, the problems as described here generally (but not always)arise out of two interrelated problems:
1. Not enough insurance to cover replacement cost of a house and it’s contents, and
2. Having to buy a separate insurance policy to cover the peril of flood which has een excluded from homeowners policies since the 60’s, using well tested language.
This itself leads to two problems:
A. two different insurers arguing over what caused which damage and each trying to push as much of the claim as possible onto the other company; and
B. Not enough flood coverage. Unfortunatley the national flood program does not offer limits high enough to cover the value of most houses exposed to floods, and, if the agent even thinks about it, the insured is reluctant to purchase even another policy providing excess flood coverage.
To me the best possible answer includes several facets:
1. Increase the limits available under the national flood program;
2. Charge more realistic rates for the flood coverage. The system now is heavily subsidized by the Feds and is, in fact bankrupt by many billions of $. Those that live in flood plains MUST pay rates commensurate with their exposure to flood loss. After all, why should I, who live many miles in from the coast, have to subsidize rates for those who wish to live on the coast or in recognized flood plains.
2. Make flood coverage from the National Flood Program available as an endorsement to the homeowners policy, with the peril of flood reinsured back to the NFIP.
This gives one insurer covering all the damage, and one adjuster handling everything. It doesn’t solve the allocation of damage between wind and flood, but does mean the insured doesn’t have to fight that battle. The allocations can be done on a case by case basis by the issuing insurer and the NFIP.
This guarantees that, as long as the insured buys proper amounts of insurance, they are made whole, which, after all, is what we are in business for, and they are made whole with the least amount of agony on thier part which also is what we are in business for.
Of course, getting them to buy the proper amount of insurance in the first place is a whole ‘nother problem. And the ones who knowingly don’t buy enough insurance are the ones who scream the loudest when the insurance company tells them they aren’t fully covered.
Excellent comment Temblor. I’m not sure why there wasn’t a huge push to overhaul the NFIP after 2005’s historic hurricane season. I have flood insurance even though I live somewhere that has never flooded and probably won’t ever flood. It’s cheap to insure against and it’s something that I don’t have to worry about now.
There was a push to overhaul NFIP — by adding wind coverage at subisdezed (inadequate) rates. The push was in the wrong direction (IMHO), and was eventually defeated.