National Flood Insurance

[conehead433]

With the US government as the only provider of flood insurance I'm asking myself why do we allow the government to insure home owners who build 100 feet from oceanfronts, riverways, etc. that are prone to flooding. Some of the pictures from Sandy's devastation show oceanfront homes that have had their foundations undermined by the tidal surge. Of course these homes will be rebuilt using flood insurance money. This insurance isn't cheap by any means, but when you consider the cost to taxpayers the home owners are getting quite a bargain. Of course if the government actually operated using a brain of some type we (the Taxpayers) wouldn't be underwriting insurance on any of these homes unless they were built off the ground on pillars. Wouldn't we be better off doing away with this program and if anyone built on the water and lost their home - they would be screwed. The price of the glorious view these people have shouldn't be at any cost to taxpayers. So I say let's do away with the National Flood Insurance program and just maybe people will quit being so stupid as to build where their homes can and will end up being lost due to flooding.

 

[SarcasticDwarf]

One word: politics. The people with the beachfront homes are the same people the contribute lots of money.

 

[SheHateMe]

I'm betting anyone with a beachfront property is most likely making more money than the average American.

As you saw in Katrina, a lot of those folks affected didn't even know about Flood Insurance, they thought their regular homeowners insurance covered it.

I am guessing there are a lot of people Sandy fucked over that don't have flood insurance either.

Should we really be bitching about rich folks and their beachfront properties being destroyed? They paid good money for their insurance and their properties..they deserve to have them rebuilt.

 

[DrPizza]

I agree to an extent. The program is supposed to be self-supported through premiums, and to be able to borrow from the US Treasury in times when claims exceed revenues. (To be paid back, plus interest.)

Realistically, the premiums are far too low. In a "nice" year, things are fine, but a hurricane or two later, the taxpayers are on the hook for billions. The biggest problem with it is that since premiums are so low, it actually encourages people to build in areas highly prone to frequent disasters. What's worse - along the coast, when the houses survive, our tax dollar spend a fortune on fixing up the beaches that are eroded away.

Reality: shorelines change. But, we let people have deeds to that property and for whatever reason, we put property back that ceases to exist due to Mother Nature's will.

But, if they could actually use actuarial science to set the rates, then I'd have no problem with it.

 

[sactoking]

The NFIP doesn't just protect coastal zones, it protects the entire country from flood hazard. There are specific zones all throughout the country which are required to purchase flood insurance but there are also as many or more where it is optional but recommended.

I live in the high desert and we still have flood plains and required flood zones here. A couple of years ago a levee maintained by the Army Corps burst in a nearby town and flooded 70 or so homes; only 1 had flood insurance.

And the premiums aren't cheap, either. There are huge battles between communities and the NFIP over flood zone rating because the premiums can be prohibitively expensive, and they only go up if you are in a mandatory zone. Anecdotally, my homeowner's policy is $400/year. If I wanted to add earthquake coverage it would run me about $200/year. NFIP coverage, in an optional zone, would run me an additional $1000/year. If I lived closer to the river and ended up in a mandatory zone it would increase to about $1600/year.