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It may not be required even though you're in a hurricane prone area because you're not in a flood plain (or not the one where it's required).
That's true. In Maryland wind and hail damage is covered by the standard homeowner's policy. In other states, I'm guessing Florida, it's a separate rider/coverage requirement.
In Florida, windstorm coverage can be a separate policy than homeowners OR it could be included as a rider within the homeowners policy.
How was NFIP mismanaged or incompetent? Every time the rates were increased, people complained that they couldn't pay them, and the rates got lowered. The program was doing OK until Katrina hit. If NFIP was cancelled, there would be almost no flood insurance available, as commercial companies would refuse to sell policies. that's one big reason the program was created by Congress in 1968.
Most people with mortgages can't opt out of flood insurance.
NFIP is mismanaged because the premiums do not reflect actual risk. Some people with no claim history are way overcharged (premiums are around $7,000/year here even on homes that have never, ever flooded) and others with multiple claims because they flood frequently are way undercharged.
Obviously, it's those who are overcharged that have the most money (usually waterfront property) and are more likely to be able to opt out and self-insure which further exacerbates NFIP's losses as they end up stuck with a disproportionate number of those who are undercharged, paying low premiums, but have repetitive claims.
So? I live in a location that experiences hurricanes pretty much every year. Mortgages here only require homeowner's insurance, period. Any other coverage is optional. I do carry NFIP flood insurance because I know that my basement has had water in it previously, the same as I had it for my previous house because I lived 3 blocks from the Potomac River. My choice, but not required.
Mortgages only require flood insurance if your home is in a FEMA high-risk flood zone. If it's not, flood insurance is optional.
NFIP is mismanaged because the premiums do not reflect actual risk. Some people with no claim history are way overcharged (premiums are around $7,000/year here even on homes that have never, ever flooded) and others with multiple claims because they flood frequently are way undercharged.
Obviously, it's those who are overcharged that have the most money (usually waterfront property) and are more likely to be able to opt out and self-insure which further exacerbates NFIP's losses as they end up stuck with a disproportionate number of those who are undercharged, paying low premiums, but have repetitive claims.
Cost of insurance for natural risks is not based on claims history of an individual insured, it's based on the risk profile of an entire area. Which is why my storm insurance has gone up, despite having no claims in almost 30 years.
If NFIP premiums reflected actual risk, then a large percentage of properties in a given area would go into foreclosure when the owners failed to maintain flood insurance. I think that would be a good thing, because there are too many people living in areas where no one should be allowed to live.
For places around here on the beach, like Galveston Island or Crystal Beach, a premium of $7,000 probably wouldn't cover the risks. Crystal Beach was one of the places that Ike wiped off the map almost completely.
Cost of insurance for natural risks is not based on claims history of an individual insured, it's based on the risk profile of an entire area. Which is why my storm insurance has gone up, despite having no claims in almost 30 years.
Is anyone surprised that when premiums are NOT based on risk, the program loses money?
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If NFIP premiums reflected actual risk, then a large percentage of properties in a given area would go into foreclosure when the owners failed to maintain flood insurance. I think that would be a good thing, because there are too many people living in areas where no one should be allowed to live.
For places around here on the beach, like Galveston Island or Crystal Beach, a premium of $7,000 probably wouldn't cover the risks. Crystal Beach was one of the places that Ike wiped off the map almost completely.
There are 40 to 50 year old oceanfront homes here that have never flooded. Not even once. But they still have $7,000/year premiums. That's way too high and people are opting out to self-insure, guaranteeing that NFIP will lose even more money. That's just the way it is.
You have FLOOD insurance AND A SEPARATE HOMEOWNERS POLICY on top of it.
NOBODY is getting "only a $70,000 payout" on a 5 bedroom oceanfront home event unless they're idiots and didn't purchase insurance OR decided to self insure.
AND you can get flood insurance privately not just from FEMA, BTW.
I go bare blare on all Ins and including Health Ins. No flood or HOI. Saves me enough to buy another house like a silly mouse.
That's fine just don't come looking for assistance of any kind in the next hurricane.
I pray for one every year. My area on the gulf has not had a hit in over a 100 years. I can't even get rain let alone a cane jane. Lived here all my life since 1963 and never even had a twig blow off a tree. Back in 2010 these big homes on the gulf could not even get a comp to insure them and if you could get it HOI it was 20k + a year. And flood Ins is over 12k a year and up now. Adds up fast jack.
NFIP is mismanaged because the premiums do not reflect actual risk. Some people with no claim history are way overcharged (premiums are around $7,000/year here even on homes that have never, ever flooded) and others with multiple claims because they flood frequently are way undercharged.
Obviously, it's those who are overcharged that have the most money (usually waterfront property) and are more likely to be able to opt out and self-insure which further exacerbates NFIP's losses as they end up stuck with a disproportionate number of those who are undercharged, paying low premiums, but have repetitive claims.
NFIP is hamstrung by politicians that set the programs rules.
Once you reconcile that and that they are not some independent group, you can recognize that (as usual) politicians are the root problem in these cases as they protect niche donors and constituencies.
The people operating NFIP have no more control than the folks working for any govt. agency that congress etc. is setting the marching orders for.
Is anyone surprised that when premiums are NOT based on risk, the program loses money?
There are 40 to 50 year old oceanfront homes here that have never flooded. Not even once. But they still have $7,000/year premiums. That's way too high and people are opting out to self-insure, guaranteeing that NFIP will lose even more money. That's just the way it is.
That's up to the property owners if they don't have a mortgage. The $7,000 premium reflects the risk. The past is irrelevant to what happens in the future, and is a poor predictor of what weather might do.
What do you think the premiums should be, keeping in mind that it is areas that are rated, not individual properties?
That's up to the property owners if they don't have a mortgage. The $7,000 premium reflects the risk. The past is irrelevant to what happens in the future, and is a poor predictor of what weather might do.
What do you think the premiums should be, keeping in mind that it is areas that are rated, not individual properties?
Past results are often the very best predictor of future outcomes. FEMA yammers on and on about past flood results on its webpage. 50 and 100yr. flood estimates are all about past results with a mix of updated topography.
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The issue at hand is that for many flood insurance on the merits is such a bad deal lots of people who are able simply pass.
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