Flood insurance

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windeguy

Guest
Here in the USA we have a Very Stupid Program of Federally mandated and subsidized flood insurance which keeps paying folks to the coast to REBUILD their homes in the exact same places. If it were private insurance -- only the super rich could afford it and it would be one of their 5 houses and we would not be facing the possibility of loss of life.
That is indeed ridiculous. Governments should not be in such a business.
 
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AlterEgo

Guest
That is indeed ridiculous. Governments should not be in such a business.
As someone who owned a home on a barrier island for 36 years, and who had almost $250,000 damage from Sandy, I can tell you that our flood insurance paid us a grand total of $27,000. Their policy is to deny, deny, deny. And then the rates skyrocketed. People WITHOUT insurance were given disaster monies, and in many cases got much more than we did. We did not qualify because we had the insurance.

Now, contrast that with all the Caribbean and southern Atlantic islands, most of the residents get nothing.
 
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Cdn_Gringo

Guest
The reality will set in eventually. People shouldn't be building primary residences on flood plains and within storm surge locales. As flooding events increase in frequency and severity going forward, there will come a point in time, when govts will have no choice but to cut back the amount of homeowner support they dole out in these situations and the cost of add-on flood insurance will skyrocket. Many insurers won't cover a property for flooding if it is located in a vulnerable area. Thus it is only govt's political generosity that permits this situation to continue. John Doe citizen would never cough up the coin to own a house that could and likely will be be wiped off its foundation at some point without govt assurances that remuneration will be provided.

Unfortunately, the state of Florida may need to move lock stock and barrel to Wisconsin but you can't tame nature to the extent needed to protect property so continuing to do so is a fool's errand and a waste of taxpayer money. Wish to position a house where you can cast from the porch, pay for the risks of doing so yourself I say.
 
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Matilda

Guest
The reality will set in eventually. People shouldn't be building primary residences on flood plains and within storm surge locales. As flooding events increase in frequency and severity going forward, there will come a point in time, when govts will have no choice but to cut back the amount of homeowner support they dole out in these situations and the cost of add-on flood insurance will skyrocket. Many insurers won't cover a property for flooding if it is located in a vulnerable area. Thus it is only govt's political generosity that permits this situation to continue. John Doe citizen would never cough up the coin to own a house that could and likely will be be wiped off its foundation at some point without govt assurances that remuneration will be provided.

Unfortunately, the state of Florida may need to move lock stock and barrel to Wisconsin but you can't tame nature to the extent needed to protect property so continuing to do so is a fool's errand and a waste of taxpayer money. Wish to position a house where you can cast from the porch, pay for the risks of doing so yourself I say.
Have you tried obtaining house insurance in the DR. We tried when we bought the house we are in now, but because it has glass in the windows ( which it appears is strange in this country) the house had to be surveyed before the insurance could be granted. The surveyor called to arrange the appointment and his first question was, "Do you have a dog?" The answer was "yes, we have 4, " and he announced they do not survey houses where there are dogs. Hence, we have no house insurance.

Matilda
 
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drstock

Guest
Have you tried obtaining house insurance in the DR. We tried when we bought the house we are in now, but because it has glass in the windows ( which it appears is strange in this country) the house had to be surveyed before the insurance could be granted. The surveyor called to arrange the appointment and his first question was, "Do you have a dog?" The answer was "yes, we have 4, " and he announced they do not survey houses where there are dogs. Hence, we have no house insurance.

Matilda
That qualifies for "Only in the DR"!
 
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Cdn_Gringo

Guest
Insurances companies are my least favorite corporate entities. Their business model is to take your money and then bend over backwards to find a reason not to pay a claim. A good sized disaster can wipe out an insurance company or a bunch of them in the blink of an eye.

Here in the DR there just isn't the pool of customers to fund the type of potential losses from strong storms, negligence, malfeasance and whatever else. So here in the DR the companies are very selective in who they cover, what they cover and usually cap their liability at a price point much lower than the replacement cost of that which is being insured.

Similarly back home, most insurance companies will not cover flooding (except sewer backup) for the very same reasons. Way too much financial exposure on a per event basis that cannot be covered by premiums that people will pay. Here, when storm X blows through Seahorse Ranch, those with hurricane coverage may get something, but won't be rebuilding unless they have additional funds of their own available to do so.

In the US that does have a govt funded flood program, those who can afford the premiums and live in a high risk area, get that coverage and the taxpayer pays to rebuild their home whenever and as often as needed. Canada doesn't have such a program but the federal govt usually coughs up some cash to help people rebuild. I believe "we" are beginning to rethink that approach and new planning and zoning rules are beginning to reflect this in a limited way. A few more bad years and some politician may be forced to admit that the public expectation and govt desire to buy votes just isn't going to continue as is forever.
 
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AlterEgo

Guest
In the US that does have a govt funded flood program, those who can afford the premiums and live in a high risk area, get that coverage and the taxpayer pays to rebuild their home whenever and as often as needed. Canada doesn't have such a program but the federal govt usually coughs up some cash to help people rebuild. I believe "we" are beginning to rethink that approach and new planning and zoning rules are beginning to reflect this in a limited way. A few more bad years and some politician may be forced to admit that the public expectation and govt desire to buy votes just isn't going to continue as is forever.
Just a clarification...... In the US, if you live in a flood zone, and you have a mortgage, buying flood insurance isn't optional, your mortgage holder will demand it. As part of the survey that's done before buying, the flood level is reported, and your premium is based on that. Oceans, bays, rivers, etc. affect it.
 
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william webster

Guest
Gracias AE
We Canadians need education in American ways.....obviously ^^^^^^^
 
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Bryanell

Guest
.....A good sized disaster can wipe out an insurance company or a bunch of them in the blink of an eye.

Here in the DR there just isn't the pool of customers to fund the type of potential losses from strong storms, negligence, malfeasance and whatever else. So here in the DR the companies are very selective in who they cover, what they cover and usually cap their liability at a price point much lower than the replacement cost of that which is being insured.
Interesting theory, but in today's insurance industry it's just not so. Insurance companies in the DR operate in the same way as insurance companies do worldwide. No one company carries 100% of the risk by itself. All have extensive reinsurance agreements with larger reinsurance companies customarily outside the DR, who themselve spread their risk by sharing with other entities and so on ad-infinitum. That's how the insurance market works, that's how insurers can make money from "unprofitable" risks, therefore it is unusually rare for an insurance company to fold under the weight of claims. Insurance markets, most notably Lloyd's of London have faced huge losses from natural disasters and space exploration and have managed to keep their heads above the water (no pun intended). Insurance companies generally do not have large surpluses of income from premiums over the amounts paid out in claims. The bulk of their profits come from using premium income as stake money for investments and financial acquisitions.
 
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mountainannie

Guest
As someone who owned a home on a barrier island for 36 years, and who had almost $250,000 damage from Sandy, I can tell you that our flood insurance paid us a grand total of $27,000. Their policy is to deny, deny, deny. And then the rates skyrocketed. People WITHOUT insurance were given disaster monies, and in many cases got much more than we did. We did not qualify because we had the insurance.

Now, contrast that with all the Caribbean and southern Atlantic islands, most of the residents get nothing.
AE- I assume that you had flood insurance through the National Flood Insurance program? https://en.wikipedia.org/wiki/National_Flood_Insurance_Program

Would it have been possible for you to also buy a supplemental policy on the private market or is that somehow forbidden?

I find it very odd that it was the Dems that tried to cut back on the Federal subsidy program while the GOP voted to roll back restrictions....

I know that MOST home owner insurance agencies make a big effort to down size their pay outs...

Also ?? could you have gotten any $$ if you had decided NOT to rebuild your house on site? My understanding is that that FEMA program only pays homeowners to repair existing structures... Seems that there ought to be some sort of program to rather just buy out the owners in some of those flood zones --

Of course - very few folks will walk away from coastal properties in the USA yet --
But - on the other hand - with more and more severe hurricanes and floods predicted - I am not so sure that all taxpayers ought to be on the hook for rebuilding in the federal designated flood zones....
 
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Cdn_Gringo

Guest
Lloyds has been bankrupted more than once. Most recently I believe in 1993 as a result of asbestos claims. Besides, Lloyds really isn't a true insurance company in the sense that we are discussing in this thread.

https://life.spectator.co.uk/articl...f-lloyds-of-london-is-still-a-risky-business/

https://www.telegraph.co.uk/finance...Lloyds-of-London-to-its-knees-in-the-90s.html

https://www.telegraph.co.uk/finance...mes-face-bankruptcy-as-court-battle-ends.html

Insurance companies of all sorts become insolvent all the time. Usually after major disasters resulting in lots of simultaneous claims. Creative accounting, paper shuffling, debt equity deals, govt bailouts and corporate takeovers usually reset the clock for a period of time. No doubt there is lots of money in the insurance industry, but it isn't all available to pay claims. Everyone else gets paid first before a policy holder does.

DR insurance companies are not playing at the same level as more developed and mature insurance markets. The fact that the majority of people in this country do not have insurance policies makes a DR insurer not very attractive to reinsurers - lots of potential liability, not a whole lot of income.

The insurance industry is more complicated than most realize. While there are regulations to help ensure that insurers don't spend all the money they bring in, just like with the banks, there is no legislation requiring them to have enough cash on hand to pay all of the policies they hold. When the money to pay claims runs out, so do the insurers and in steps something to bail them out (usually) while attempts to deny or limit claims intensifies.
 
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bob saunders

Guest
Just a clarification...... In the US, if you live in a flood zone, and you have a mortgage, buying flood insurance isn't optional, your mortgage holder will demand it. As part of the survey that's done before buying, the flood level is reported, and your premium is based on that. Oceans, bays, rivers, etc. affect it.
This is also true in Canada, at least in British Columbia where there are many rivers that flood, some every year and others every 20 or 30 years.
 
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MikeFisher

Guest
A Mod should move those insurance posts into a new separate topic under the weather section, as it will get lost in the vast amount of posts here on this one.
 
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MikeFisher

Guest
me stupid, i followed the link and thought i am on the hurricane topic, lol.
nevermind.
 
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cobraboy

Guest
I had numerous waterfront rental properties in FL from 1992 to 2004. Besides standard homeowners insurance for rental properties, they were also required to have flood *and* wind insurance.

In the 12 years, wind and flood insurance premiums went up almost an average of 20% a year, 40% in one year.

I had one situation where claims were filed. I recall the deductible was 33% of the total claim. Had I not done the repairs personally, the cost of hiring a contractor would have been cost-prohibitive.

I bailed for properties elsewhere.

I still keep tabs on similar properties in the area. I'm shocked at the sold prices, unbelievably high. I can only imagine what the insurance costs are now.

I can understand why regular insurance companies won't cover properties in flood zones, and I understand why building regulations require first floors being 11' above mean high tide, well above the 100-year flood height with the lower space being uninsurable.

I have less problem with a state-run insurance programs as long as the premiums reflect actual acuarial estimated costs, the program is run with secondary insurers, and Joe and Molly Six-Pack are in no way subsidizing the payouts or premiums.

You wanna live near the sea, Bubba? You're gonna have to pay up...
 
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Bryanell

Guest
Lloyds has been bankrupted more than once. Most recently I believe in 1993 as a result of asbestos claims. Besides, Lloyds really isn't a true insurance company in the sense that we are discussing in this thread.
Just to clarify, Lloyd's is NOT an insurance company AT ALL. It is a body that facilitates companies and individuals to accept risks against payment of premiums. It functions as a market in a way similar to how a shopping mall would be owned and managed, and it is managed by the Corporation of Lloyds which does not engage in insurance business and has not been bankrupted. Any losses sustained by the "names" - individual underwriters or market traders if you will - are solely their own losses (the only limit to the liability of a "name" is the full extent of his own wealth) so they are technically and legally not, not the liability of the Corporation. Certainly many "names" have been bankrupted over the years but there has been no shortage of others stepping in to take their place.

My own career in the insurance industry began in 1962 and for much of that time, up to and including the present, I have been closely connected to Lloyds, in the UK and pretty much world wide. There have been many changes and innovations during that period as the "market" keeps up with the 21st century whilst maintaining many customs, principles, practises and standards since the days of Edward Lloyd's Thames side coffee shop in 1634.
 
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windeguy

Guest
Governments should not be in business whether that business is insurance or any other type of business.
 
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cobraboy

Guest
Governments should not be in business whether that business is insurance or any other type of business.
In general, I agree.

That said, if gubmint got out of the flood and wind insurance business many state and local economies would completely collapse. A good example is the entire Gulf and Atlantic coasts of the US. Tourism to those regions represents massive billions or trillions of economic activity.

The downside of localized economic collapse is mitigated by the downside of gubmint being in businesses they shouldn't.

I just don't want those with no direct dog in the hunt to subsidize those who do.
 
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Cdn_Gringo

Guest
Perhaps private properties that need to rely on publicly funded insurance because they were built in a high risk area could have a finite number of claims or lifetime max payout from that system. Need to rebuild/repair your house for the third time, maybe the answer should be no further insurance available here. Time to relocate...
 
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cobraboy

Guest
Perhaps private properties that need to rely on publicly funded insurance because they were built in a high risk area could have a finite number of claims or lifetime max payout from that system. Need to rebuild/repair your house for the third time, maybe the answer should be no further insurance available here. Time to relocate...
Newer building codes have done much of the same thing.