Posted On: September 28, 2007, 8:36 am CDT

Posted By: Cap

So what the feds have done have created a competing homeowner's insurance product, but without fire, theft, liability, etc. -Just wind, flood and BI. Does this mean that private insurers are going to be able to get new coverage forms filed that cover just the things the feds are leaving out? If you purchase your flood and wind insurance from the federal government, will you be doubling up your wind insurance by purchasing a standard policy?

Assuming that the government doesn't make a horrible mess of the program (ha! like there's any chance of that)..... This would mean that private insurers might actually want to write business on the SE coast again. Assuming someone like FL's Crist doesn't go on another mushroom-gathering expedition and start hallucinating again, and do something like demand that insurance companies offer wind insurance for less than federal rates.

Of course, this isn't going to solve the REAL problem - which is not underinsured people or people unable to find insurance. The real problem is people who don't understand how insurance works and fail to purchase the amount they need. Here's my scenario:
1) Feds offer wind insurance
2) Private Insurers offer the option to drop wind coverage in coastal areas
3) Bob the Guy Who Lives On the Sea buys the now-much-less-expensive wind-coverageless policy
4)Bob fails to buy federal insurance
5)Hurricane knocks Bob's house down
6)Bob sues the private insurer because wind isn't covered
7) Media drags the insurance industry through the mud again because they "don't care" about the poor, poor Bob
8) Pseudo-commie state legislators in Bob's state respond by screaming, running around in circles, and trying to pass laws that make Bob's Insurance company take a loss in Bob's state, figuring that places like Idaho should subsidise Bob's inability to purchase the right coverage