Nearly 80% of Federal Flood Insurance Policies to Cost More, Study Says

[Alligatorob]

https://www.wunderground.com/video/...od-insurance-policies-to-cost-more-study-says

Flood insurance has been a poorly run program from the beginning, and was probably a bad idea to begin with. It is a program of the federal government and pretty much has to be. Too much loss can occur all at once for private insurers to take the risks. Its why little private flood insurance is available. The government has under costed it and given too much weight to political pressures to keep costs down.

Another big problem is that the existence of the program has lead to a whole lot of development in coastal areas and floodplains that could never have happened without it. Flood insurance is necessary for all of these developments to get financing. Result is we now have millions of people living in at risk places, and often on what was once lovely wetlands and beaches.

Rather than reform I would prefer to see it ended as quickly as possible without any more economic disruption than necessary. If private insurers want to off it, no problem, the government just needs to get out of it.

 

[raybar]

In general, with exceptions to be expected as needed, I would prefer the government to stick to governing and stop trying to do everything for everybody. I need no surrogate parents.

Government flood insurance could be ended over time simply by issuing no more new policies, and cancelling existing policies once the insured have received a fair settlement after the next disaster.

 

[Manatee]

My recollection is that commercial insurance were unwilling to write flood insurance.
In the beach town where I lived some 21 years ago, FEMA dictated changes in the building code, or they would not write flood insurance coverage. It was a very nice place to live.

 

[Alligatorob]

FEMA dictated changes in the building code, or they would not write flood insurance coverage

That is true, but in my experience they were not well enforced, and mostly inadequate. I lived in such a place for a long time, paid for a lot of flood insurance, and collected a lot on it as well. And managed to evade some of those FEMA codes myself. So I do know a bit about it. Happy that is all past now.

My recollection is that commercial insurance were unwilling to write flood insurance.

Also correct, and we should learn something from that, only the US government was foolish enough to take the risks.

 

[Don M.]

It seems that the effects of "climate change" are accelerating, and there will likely be a lot more flooding...especially in coastal regions...in coming years. Eventually, the costs and effects of living in such regions is going to result in a substantial migration further inland, and a huge financial loss to those who stay put.

 

[squatting dog]

While humans have been around for about six million years Civilization as we know it is only about 6,000 years old, and industrialization started in the earnest only in the 1800s. In the overall timeline of the Earth, however, six million years is not very long. The Earth itself is 4.5 billion years old, and it will be around long after we humans have disappeared.

 

[Alligatorob]

The Earth itself is 4.5 billion years old, and it will be around long after we humans have disappeared.

Yep, and all of our impacts, environmental, structural, etc. will be little more than a footnote in the fossil record. It is easy to overestimate our important in that big picture.

 

[fuzzybuddy]

For people, who live in a flood plain, flood insurance from a commercial insurance company is ungodly expensive. Very few could afford to get any. The government subsidizes their flood insurance. That's why it's such a loosing proposition. There's no way premiums cover the cost. It amazes me how when it's sunny and warm, you want government out of your business, but when it floods, it's "what the hell is the government doing about this?"

 

[HoneyNut]

For people, who live in a flood plain, flood insurance from a commercial insurance company is ungodly expensive. Very few could afford to get any.

Even FEMA flood insurance is an ungodly expense. I live in a 100 yr (maybe less, not really sure) flood area and to have a mortgage it required an extra $500 a month for FEMA. As soon as I paid off the mortgage I dropped the flood insurance. It is a gamble though. There was a big flood here a few years ago and lots of people lost their houses, more than expected because it turned out all the towns have laws that condemn a house if the flood damage is 50% of the value of the house.

 

[Alligatorob]

For people, who live in a flood plain, flood insurance from a commercial insurance company is ungodly expensive. Very few could afford to get any. The government subsidizes their flood insurance. That's why it's such a loosing proposition. There's no way premiums cover the cost.

Yep, we are subsidizing flood plain development on a grand scale! The New Orleans area is a good example, despite the extensive flood damage in Katrina FEMA rates are still low compared to the risk. The average in New Orleans is $638/year and in St. Bernard Parish, a little south east of New Orleans the average is just $527/yr ( https://www.valuepenguin.com/flood-insurance/louisiana ). Katrina's flooding totally destroyed most of the homes in St. Bernard Parish. This is an area where many of the people live below sea level, the only thing protecting them from flooding are the levees ( https://biotech.law.lsu.edu/la/geol...ng-Geology-of-St-Bernard-Parish-Louisiana.pdf and https://gnocdc.s3.amazonaws.com/maps/PDFs/neworleans_elevation.pdf ). And we, the federal government, pay most of the cost of constructing and maintaining those levees. So in that are we double subsidize...

I live in a 100 yr (maybe less, not really sure) flood area and to have a mortgage it required an extra $500 a month for FEMA. As soon as I paid off the mortgage I dropped the flood insurance.

Yep, and you got a bargain at that. My last flood insurance bill was over $10,000 and came with a promise of a 20% rise per year without limits. You need to be careful letting the insurance go, it can be harder and more expensive to buy FEMA flood insurance if you have not maintained it. That can make it a lot harder to sell your house. Check into it, you may be risking more than a flood without insurance.

towns have laws that condemn a house if the flood damage is 50% of the value of the house

Yep, that is a FEMA dictated rule. If the towns or counties don't adapt the rule FEMA will not sell flood insurance to the residents. And the rule is applied to the value after flooding, so if your now damaged house will cost more than 50% of its damaged value to fix you can't do it. We were able to convince our local building officials to work with us on this one a couple of times, but I understand FEMA is cracking down. Happy to be living where I no longer am at risk of flooding. All I have to worry about here are fires and earthquakes!