A question about flood insurance for Louisiana & Miss residents

[Jersey Devil]

A standard homeowner insurance policy covers wind/rain/storm damage but does not cover damage from flooding even if it is associated with a storm. Right now they are beginning the process of having insurance adjusters go to individual homes and assess how much damage was from the wind/rain and how much was from flooding. You don't get paid for the flood damage under the standard policy.

My question is how common is it for homeowners in LA to carry federal flood insurance that would cover flood losses? I know that up here in the northeast all the mortgage lenders require flood insurance if you are in a federally designated "flood zone" and assume that is also the practice in LA and Miss. I keep hearing all these people talk about rebuilding but I keep wondering how many of them are going to get enough money to do it.

[Alpharetta]

1. I am curious as well

I would expect mortgage underwriters to require flood insurance for those dwellings in flood plains. So I expect a large majority to be covered.

I do share your concern for those who didn't carry coverage. Hardship abounds.

Here's an article which gives what I think are reasonable estimates for the expected claims payouts.
http://www.courant.com/business/hc-estimate0910.artsep10,0,2523835.story?coll=hc-headlines-business

The point I keep trying to make is that the federal payout will vastly exceed what it would have taken to shore up the levees. A poor investment choice by Uncle Sam.

[ohio_liberal]

2. SBA Loans

Those who don't have flood insurance have to apply for an SBA loan and in the meantime FEMA typically gives a small amount of cash for emergency repairs (the highest I've ever heard of was about $3,800 for emergencies). If for any reason they are turned down, and I don't know how often that actually happens, you go back to FEMA for Individual and Family Grant Program. There's a cap on how much money you can get via FEMA and the amount escapes me at the moment.

edited to add link:

The IFG cap is $13,600.
http://www.fema.gov/news/newsrelease.fema?id=9241

[Dogmudgeon]

3. Most of them are wiped out

Some of the major news organizations have published data kept of National Flood Insurance statistics for the various parishes in and around New Orleans. IIRC, not one of them had better than 50% flood insurance rates. For most homeowners, Katrina has been a total loss.

The good news is that they will be able to finance their brand-new homes at slightly lower rates.

Of course regular homeowners' insurance doesn't cover floods. The insurance companies argued that they should only be required to cover the unlikely risks. If they had to cover the realistic risks of owning a home, that would be ... Socialifm, Sir! Socialifm moft Foul!

And that's what makes America great.

--p!

[Nat-X]

9. Let the free market determine flood insurance rates

Here's something to think about: if flood insurance rates were determined the free market and if the private sector underwrote the insurance, not the federal goverment, then you and I wouldn't be subsidizing the lifestyles of the well-off living in their million dollar beach front homes. That really sucks, because the rich don't pay taxes anyway, and you and I have to pick up the tab to make their insurance cheap and to rebuild their homes! Here on our barrier island, the beach residents do not even pay property taxes! They pay some measily "lease fee" of a couple hundred dollars a year.

There should be a government program to apply progressive flood insurance premiums so that the poor and the rich aren't paying the same rates; that's not fair. Hopefully, the goverment will step in and give Katrina victims a million or two like they did for all those rich stock brokers families after 9/11. That'll really make 'um mad!

[Dogmudgeon]

10. Are you advocating the Free Market?

You mean, make the Rich play by the same rules as the Poor ... ?

What are you, some kind of Socialist?

:evilgrin:

--p!

[Nat-X]

11. In this instance, yes

People who build on the Gulf front should have to pay the real cost of insurance (free market price), not a taxpayer subsidized, ridiculously low premium.

Of course, that would guarantee that only the rich or very-well-off would be able to live on the beach. I certainly couldn't afford a $5000-$10,000 per year premium, which would probably be the free market cost. But, that's okay, as long as the rest of us don't have to pick up the tab for them. I hate the beach, anyway.

[trof]

4. I have flood ins. But the "system" is spotty, at best.

I live in a designated floodplain, and my mortgagor requires flood insurance.
But...we're 9' above mean high tide line (we live on a bay) and have never flooded. Ivan came closest, but still no flooding.

My neighbor down the street is lower than I am. His mortgage company did not require flood insurance. I advised him to get it anyway, and he did. He had 6" of water in his house from Ivan.

Go figure.
:shrug:

[abluelady]

5. Our Mortgage Company Required it Also

When we bought our home we were not required to have flood insurance and we lived in an area that wouldn't flood. There was a tiny, tiny, creek at the very end of our property which was usually dry. (Our house sat up high on the property.) Otherwise we were not near any water. Our mortgage got sold a few times and the last mortgage company required it. If you buy through the government it is sky high and we didn't realize we had other options the way it was presented. So we tried to fight it but that got costly and then STATE FARM came to our rescue and we were able to buy a good policy at a good price!

I think the insurance companies are claiming the don't have to pay because the levee breaking caused the water instead of the hurricane? Whatever.

[Sgent]

6. Huh?

My guess is that your state farm agent actually took the time to get the proper elevation level on your house.

All flood insurance policies in the US are the same -- same price, same coverage, etc.

State Farm, Allstate, etc. are merely agents for the National Flood Insurance Program.

[abluelady]

7. That could be

But the original price that we were going to be charged, if we didn't purchase our own policy was more than 4 times as much as what we paid!

[Nat-X]

8. As an experienced Ivan survivor...

Got some experience on this. National Flood Insurance is cheap. I had a house on a canal that lead into the bay. My house was 7' above MSL. My yearly premium was only $178 per year. Yes, $178! Why so cheap? Taxpayer subsidized.

The insurance adjusters are going to try to determine how much of the damage is attributed to rising water, versus how much is caused by wind and wind driven rain. So, if your house is covered in 20' of water caused by storm surge or other rising waters, but is otherwise undamaged and you have flood insurance, your entire house would probably be covered under the flood policy. Your normal homeowners policy wouldn't pay anything, unless you have coverage for contents or outside structures, pools, etc.

If your house is under 20' of water and you have no flood insurance, you're screwed! Should have spent the $200.

If your roof in ripped off and rainwater destroyed the inside of the house, your homeowners policy will cover it.

Here's where it gets tricky. If you lose the roof AND flood waters enter your house, STFB. If you only have homeowners, they'll offer to fix you roof, but blame all other interior damage on floodwaters, even if you only had 1" of water in the house. If you have homeowners and flood, then the two policy issuers will spend about a year denying and pointing fingers at each other, while your house sit vacant and damaged. You're forced to get a lawyer, who is going to take half your settlement.

Then when you do get money, your mortgage company is going to hold onto the purse, forcing you to beg for your own money in order to make repairs. Why? Because some dumbass long ago took his insurance settlement to Vegas and blew it and the mortgage company was left with a destroyed house and an unpaid loan.

So, you've got many ways to get screwed when a hurricane hits your area.

Luckily for me, I moved off the water three years ago. But, because I'm in the construction industry, I heard these stories ad nausium for a year.

[politicat]

12. According to my spouse, who works for an insurance underwriter that

specializes in Gulf Coast Hurricane insurance, the Attorney General of Louisiana declared that any insurance company that wanted to continue to do business in LA would have to cover the flood damage caused by the levees breaking as storm damage.

Obviously, this is going to cause problems for both non-policy holders and for flood policy holders. Flood rates and general damage rates are going to go very high, and those who have paid flood policies are going to get little use of them.

That was the memo that went out last week in his office, and he's trying to revise the software to let the adjusters document the change right now.