How to handle flood damage after a hurricane if you're uninsured

Commentary: Crop Insurance vs Flood Insurance

Commentary: Crop Insurance vs Flood Insurance

With the recent devastation of Harvey and Irma came the revelation that people in Florida and Texas, particularly Houston, aren't adequately covered against flood damage. Although lenders typically require flood insurance on mortgaged properties within these zones, once the mortgage is paid off, homeowners may decide to eliminate the expense.

Despite the inability to hedge risk, people continued to move into flood-prone areas.

Even at the lower end of RMS' estimates, of $25 billion with $7 billion for the NFIP, it suggests a private insurance and reinsurance market loss of as much as $18 billion from hurricane Harvey, still significant.

Wright said that nationally there are about 10 million residential structures, twice the number of properties now covered, in areas that could potentially flood.

The National Flood Insurance Program (NFIP) has been extended through December 8, part of H.R. 601 passed by the House and Senate on Thursday and signed swiftly into law by President Trump on Friday. While the crop insurance program is a well-run public/private partnership that, in most years, actually returns a profit to the government, the federal flood insurance program is a massive political boondoggle that costs the US treasury billions of dollars.

It was impossible to purchase insurance policies to cover floods until 1895. The same subsidies advocate might say that to take a position against subsidies is to prevent growth and push people into rural areas where they prefer not to live.

I know the subject of downed trees and flood insurance have been covered in past articles, but I thought it would be timely if I go over each of these items due to Irma's visit to us this week.

Extensive flood damage can lead to financial ruin for the uninsured.

Flood insurance is underwritten by the federal government. But many other National Flood Insurance Program policyholders are also paying premiums substantially less than what it costs to insure them because the rates do not adequately account for the catastrophic losses incurred during years when more major storms than normal strike, such as Katrina and Rita in 2005 and Sandy in 2012.

The folly of the government's flood insurance program has been evident for decades, and some Midwestern communities have been in on the action. Wright said he's confident Congress will approve spending the money FEMA needs to pay Harvey and Irma claims. The problem is that the rates for flood insurance are not actuarially sufficient. Lawmakers could make a general fund appropriation to forgive all or a portion of the National Flood Insurance Program's debt, but it has shown no interest in doing so.

What can be done to fix the program?

Both the Obama and Trump administrations have tried to cut funding for the crop insurance program.

The Biggert-Waters Act of 2012 made a number of changes to the program, such as increasing premiums and other changes to make it "more financially stable", that would have gone a long way to restore its fiscal solvency. It is to help them rebuild. The federal share of disaster response costs has grown from less than 30 percent after Hurricane Hugo in 1989 to more than 75 percent after Superstorm Sandy, the group said. His total insurance premiums since buying the house in 1975: $6,000.

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