Village opted out of flood insurance plan

[Freddie Stubbs]

Source: Journal Sentinel

Dispute with FEMA led Lake Delton to refuse federally backed coverage

By ERIN RICHARDS
[e-mail]
Posted: June 11, 2008

Lake Delton - Residents and landowners affected by the Lake Delton breach spent Wednesday seeking an explanation for why the community opted out of a free national flood insurance program that 90% of the state's flood-prone communities have joined.

Anguish over the lack of insurance surfaced as members of the Federal Emergency Management Agency prepared to survey the damage in Sauk County and several other Wisconsin counties today.

The Village of Lake Delton began the paperwork just two weeks ago to rejoin the flood insurance program after a dispute with FEMA's floodplain elevation maps from 2001 caused it to back out. But because of that decision, residents such as Tim Fromm, Tom Pekar and Don Kubenik were not able to obtain flood insurance - which is backed by the federal government - for the homes they built on the shore of Lake Delton within the last few years.

Fromm's house worth more than $1 million is gone, and Pekar and Kubenik lost substantial parts of their houses valued at close to or over $1 million. Two other houses owned by the Wisconsin Land Co. also are gone; the company couldn't be reached.

Read more: http://www.jsonline.com/story/index.aspx?id=761341

[madaboutharry]

1. I'll tell you why.

Living in Wisconsin has taught me this: There are a lot of small minded hicks up here who don't know shit. That's why.

[LeftHander]

12. Yup that premium would of meant higher property tax...

Good thing those homeowners didn't have to pay and additional $36 on their property tax...I'll bet seeing their home cracked in half and floating downstream made them pleased with local republican dopes.

[conspirator]

21. INSURANCE COMPANIES ARE A BUNCH O' CROOKS n/t

[aquart]

2. FEMA dragged its feet on redrawing its crappy maps.

Would those houses have been covered using the bad maps? Can FEMA be sued?

[hedgehog]

6. It sounds like FEMA's maps were accurate; they predicted that this

area would flood. The town's arguement was that the land would not flood, therefore no flood insurance was needed.

[thecrow]

3. C'est la vie

"Fromm's house worth more than $1 million is gone, and Pekar and Kubenik lost substantial parts of their houses valued at close to or over $1 million. Two other houses owned by the Wisconsin Land Co. also are gone; the company couldn't be reached."

Sad, but there are two millionaires who are feeling the pain of the rest of us today.

[Igel]

14. Consider appreciation.

My parents' house was bought for $21k, sold years later for nearly $300k. Inflation didn't account for it, and this was pre-bubble.

Their new house cost $240, and was in an area hit early by the housing bubble. It soared to over $340k.

I can imagine people who make enough money buying a house for $200k, but unable to buy one for $1 million, who watch their house's assessment go past a million while their income stays about the same. In other words, they have a house worth a million dollars, but they're not millionaires. I go with assets that can be liquidated at a moment's notice, like stocks and bonds, when I judge somebody to be a millionaire (as opposed to having a net worth over $1 million).

BTW, my aunt died a millionaire, even not counting her house's value. She worked as a secretary in a VA hospital until retirement, and her husband worked as a low-paid clerk in a steel mill (he could have made more by working on the floor of the steel mill, but valued a white-collar job, however low the pay grade, over getting grubby).

[Carnea]

19. Many middle class folks struggling have houses worth that much.

Perhaps they were elderly and that was their nest egg. Why attack the middle class when they lose their houses.

[Cal Carpenter]

4. How do you get a mortgage in a flood zone w/o flood insurance?

I'd sure as hell like to know - I live in a FEMA-defined flood plain (about 2 blocks long, a tiny re-directed creek runs under my home) and have to pay over a grand a year for stupid flood insurance that doesn't even cover the stuff in my basement. Couldn't get a mortgage without it.

eta: i've read more at the link so I sort of see the answer to my question...but it's pretty convoluted imo

[ForPeace]

7. Maybe they paid cash?

Millionaires don't need mortgages - that's how.

[xchrom]

9. oh they had mortgages -- you get good tax write offs for those. nt

[Fredda Weinberg]

20. And more tax credits for the losses. No, these homes are not like our

primary residences and the concern is not legitimate. But makes for good agit-prop.

[lancer78]

23. Pfft

I "save" only 33 cents for every dollar of interest I pay out. Not worth it.

[hedgehog]

5. I believe the federal flood insurance program has a fatal flaw.

As far as I know, flood plains are NOT determined by state universities or the Army Corps of Engineers or the Geological Survey etc, but by the local government. If your town is like my town, in any given year your town government is dominated by a bunch of people hoping to develop their land. For some strange reason, people are reluctant to build a house on the flood plain. The local government obligingly redraws the maps and presto! no problem getting people to build houses where other people want to sell their land. Those water front lots fetch a special premium, too!

[AtheistCrusader]

10. Ok, but

I still don't understand why they were unable to purchase flood insurance. My home is not on a flood plain, but I was able to purchase flood insurance on my own anyway. Were they just denied this 'free' flood insurance program, whatever it was, or were they denied all forms of flood insurance? Mine is through Farmers, but it's still underwritten by the Government, like all flood insurance.

Could they have bought flood insurance, individually? If you can buy a million dollar home, and opt not to insure it, waiting around for some free coverage, I'm finding it hard to dredge up some sympathy here.

[hedgehog]

11. I'm no expert, so I'm hoping someone who is chimes in. My

understanding is that that the local government tells the federal government what areas are in the flood plain and that determines the areas the flood insurance program will cover. Too many people look at the red lined district only and think that it's an accurate prediction. Until the day the storm hits, the local officials are under no pressure to make any corrections. Who wants to tell people their house just lost half it's value because it's now officially on the flood plain? I would have said that you couldn't buy flood insurance without being on the flood plain, so clearly I don't understand the program properly.


FWIW - my policy explicitly excludes damage from flooding from any source. I did add a rider to get coverage from earthquake and I think I'm covered against ground movement. That sounds silly, but some people lost their houses a few years back when the ridge behind their houses collapsed.

[Glorfindel]

15. Google is your friend: www.floodsmart.gov

"When flood insurance is not required - If you have a home of business in a low-or-moderate risk flood zone, flood insurance is not required. However, flood insurance is still available and you may be eligible for a low-cost Preferred Risk Policy."

[AtheistCrusader]

16. So it sounds like they could have

purchased their own, but instead opted to wait around for this ruling on a group buy or free insurance policy?

[Glorfindel]

18. That's how I read it

Plus, they could probably have received a discount because of the low risk of flooding. This is a bitter lesson that many of the residents here in south Mississippi learned in 2005. If the storm is big enough or the water rises high enough, everywhere is a flood zone. :(

[hedgehog]

8. Another problem with flood plain maps: they are based on

historical high water levels. When a river, lake or stream rises higher than it ever has before, then new places get flooded. In recent years, Ive seen a lot of pictures of floods in New England taking out colonial structures. In other words, buildings that stood high and dry for 250 years are being flooded because heavy rainfall combined with upstream development is causing the rivers to rise higher.

[MountainLaurel]

13. Oops. n/t

[nodehopper]

17. I am so confused--did they KNOW they weren't insured?

the lead-in of the article makes it sound like the residents didn't realize that the community opted out of this insurance program that everyone in the area signed up for--and not just opted out, but backed out. I can see how that is something that residents wouldn't really know about unless they were very involved in local policy.

[hedgehog]

22. I think they were told they weren't on the flood plain and that therefore they

didn't need insurance. There is a difference between not being required to purchase insurance and not being allowed to purchase insurance. There seems to be a lot of confusion about who is writing the policies (Federal government or private companies) and whether or not policies are available. No one offers free flood insurance.

[Honeycombe8]

24. Don't forget that not everybody knows where a "Lake Delton" is. Is that IA or GA or...??? nt