As someone who has to tell an insured that they are only getting a portion of the damages they sustained, I think I speak with a little knowledge on the subject.
I am an Insurance Adjuster who handles Catastrophe losses. The insurance industry is suppose to be based on the law of large numbers. When you have a large pool of houses, some of them will be damaged by whatever and with the payment of premium for the large pool there is enough $ to pay for the ones damaged. The Industry I work for has turned this pool into a small one. They exclude Flood, Earthquake and in counties along the gulf and part of the Atlantic, wind. So a homeowner has to purchase a Homeowners policy, a Flood policy and a sepaarate Wind policy. All with sepaarate deductibles, in some cases 2% of the insured amount.
When a Hurricane hits an area there is some wind damage, but if it coastal it is usually the tidal surge that damages the structures. It is impossible to determine the amount of wind damage to a house when it is gone. All you can do is look at the remaining houses and see what kind of damage they incurred. You look at the surrounding trees and see that the bark is scrapped off at a height of 14 or 18 feet and you know that was the height of the debris floating on top of the surge.
In addition to this problem, NFIP, Nation Flood Insurance Program, only insures houses for $250,000 and the contents for $100,000. Most houses on the beach are in excess of these amounts. The commercial side of the program covers up $500,000 each for the building and contents.
Something needs to be done to protect the Homeowner from going bankrupt from a disaster. If this includes adding windstorm to the coverage then do it.
Barry wrotre ‘Something needs to be done to protect the Homeowner from going bankrupt from a disaster. If this includes adding windstorm to the coverage then do it.’
How about same homeowner buys his own wind policy, and leaves me out of it. When I pay for earthquake coverage, on my principal residence and my rental properties, I don’t expect some dude in Florida to subsidize me. I CHOOSE TO BUY EARTHQUAKE COVERAGE, with my dollars, because I think its smart. Others think differently, and as such keep their dollars and take a chance. I am perfectly comfortable with my decision, and presumably others are comfortable with theirs. But if the government bails them out at crunch time, why and what did I pay for?
How much do you think State Farm, Farmers, Allstate, Nationwide and USAA are spending on defense costs against all of the law suits filed against them from their policyholders? Who do you think is paying for this? Everyone who has an insurance policy is paying. If the carriers would include these perils in their policies, across the board, the premium would be minimal.
How much insurers are paying to defend the contract has nothing to do with whether or not the NFIP adds wind to their contract. Lawsuits are brought each year challenging policy language, and not just for wind. How about groundwater and mold? Adding wind and flood to a private carrier contract is different than adding it to NFIP – one method promotes continuation of the private market, the other grows government. For me, and what it costs me each year, government is already altogether too big. Our government, if they really want to help, should continue to expand the public service advertising campaign reminding folks that flood and sometimes wind may not be a part of their insurance program, and to contact their agent for more information. That is a message that helps homeowners, agents and even the insurers at a corporate level. Those messages serve to remind ALL of us what our respective job is.
The article states ‘while forgiving a $17 billion NFIP debt run up by the Federal Emergency Management Agency after 2005’s Hurricane Katrina’.
I don’t understand the concept of ‘forgiving’ a debt that large. Where did the money come from in the first place? Who loses when it is ‘forgiven’?
The tax payer loses. The tax payer always loses.
Just think how big the “forgiven” debt would be if the feds covered wind too on 8/29/05?
How kind of them to forgive it.
As someone who has to tell an insured that they are only getting a portion of the damages they sustained, I think I speak with a little knowledge on the subject.
I am an Insurance Adjuster who handles Catastrophe losses. The insurance industry is suppose to be based on the law of large numbers. When you have a large pool of houses, some of them will be damaged by whatever and with the payment of premium for the large pool there is enough $ to pay for the ones damaged. The Industry I work for has turned this pool into a small one. They exclude Flood, Earthquake and in counties along the gulf and part of the Atlantic, wind. So a homeowner has to purchase a Homeowners policy, a Flood policy and a sepaarate Wind policy. All with sepaarate deductibles, in some cases 2% of the insured amount.
When a Hurricane hits an area there is some wind damage, but if it coastal it is usually the tidal surge that damages the structures. It is impossible to determine the amount of wind damage to a house when it is gone. All you can do is look at the remaining houses and see what kind of damage they incurred. You look at the surrounding trees and see that the bark is scrapped off at a height of 14 or 18 feet and you know that was the height of the debris floating on top of the surge.
In addition to this problem, NFIP, Nation Flood Insurance Program, only insures houses for $250,000 and the contents for $100,000. Most houses on the beach are in excess of these amounts. The commercial side of the program covers up $500,000 each for the building and contents.
Something needs to be done to protect the Homeowner from going bankrupt from a disaster. If this includes adding windstorm to the coverage then do it.
Barry wrotre ‘Something needs to be done to protect the Homeowner from going bankrupt from a disaster. If this includes adding windstorm to the coverage then do it.’
How about same homeowner buys his own wind policy, and leaves me out of it. When I pay for earthquake coverage, on my principal residence and my rental properties, I don’t expect some dude in Florida to subsidize me. I CHOOSE TO BUY EARTHQUAKE COVERAGE, with my dollars, because I think its smart. Others think differently, and as such keep their dollars and take a chance. I am perfectly comfortable with my decision, and presumably others are comfortable with theirs. But if the government bails them out at crunch time, why and what did I pay for?
In response to Gill Fin:
How much do you think State Farm, Farmers, Allstate, Nationwide and USAA are spending on defense costs against all of the law suits filed against them from their policyholders? Who do you think is paying for this? Everyone who has an insurance policy is paying. If the carriers would include these perils in their policies, across the board, the premium would be minimal.
How much insurers are paying to defend the contract has nothing to do with whether or not the NFIP adds wind to their contract. Lawsuits are brought each year challenging policy language, and not just for wind. How about groundwater and mold? Adding wind and flood to a private carrier contract is different than adding it to NFIP – one method promotes continuation of the private market, the other grows government. For me, and what it costs me each year, government is already altogether too big. Our government, if they really want to help, should continue to expand the public service advertising campaign reminding folks that flood and sometimes wind may not be a part of their insurance program, and to contact their agent for more information. That is a message that helps homeowners, agents and even the insurers at a corporate level. Those messages serve to remind ALL of us what our respective job is.