Insurance companies get away with the most fucked up shit as a matter of course and nobody holds them accountable.
Insurance companies have a conflict of interest inherent in their business model. They make money by taking your money up front and then paying you back as little as possible at a later date. Any way to weasel out of paying up, especially in a big event like a hurricane, is a huge money saver for them. And most people are desperate. Their house is gone. They aren't in a position where they can argue and sit on the phone for hours and work it out.
And then, even if they do pay out, they just jack up your rates to make it all back. That's if they don't just drop your coverage completely.
Also as soon as they pay you out they either jack up the rates to recover what you paid or drop you entirely as you’re no longer profitable. It’s such a massive conflict of interest
They make money by taking your money up front and then paying you back as little as possible at a later date.
That's not entirely the case. Typically, there is a lag (of a few years) between the payment of premiums and the paying out of claims. Insurance companies invest the premiums in the meantime and profit off the interest/gains from these investments (called the "float"). Well-run (and well-invested) insurers can actually collect less in premiums than they pay out in claims and still be profitable.
We need some kind of ACA for regular insurance, where unless people are literally building in a swamp or the bottom of a crater near a lake/river they should be just automatically covered.
Florida is uninsurable, that's kinda the issue.
There's a reason so many big insurance companies have left Florida. And honestly I don't really want even more Federal money going to rebuild in the most common path of ever rising hurricane intensity.
I want Federal funds set aside to move people out of Florida in homes elsewhere for those who want it. If you want to rebuild your house in the path of the hurricane you can do it on your own dime.
A good use of money and imminent domain. A one time payment to a person and relocating them is also something the US government has experience doing, especially in Florida. Can you imagine the irony of doing it to the white folks who took over the region?
But seriously, it is an actual good idea. It would save billions in the long run and would be a good use of effort to reduce the risk of more people going broke from random weather.
There's a UK scheme called Flood Re that does this kind of thing. If you're more than a certain probability of flooding, you need to go with an insurer that's backed by the government's reinsurance policy.
That's basically how US flood insurance works. The entire country is mapped out in flood zones based on a every 100 year occurrence. If you're in the zone you're required to buy insurance... but it's bullshit. They have a bunch of inland people paying the same rate as the people's houses that are on the coast and flood every 5 to 10 years.
Private insurance used to offer flood insurance like 100 years ago, but to stay in business they had to raise premiums to a point where no one could realistically afford it (which is to say that living in a flood zone is not financially feasible for most people). The government had to step in with their own flood insurance program, which was tied to regulation intending to minimize the risk of flooding in at-risk zones so that premiums could remain affordable. Even these measures haven't been sufficient to keep the program from running out of money, and we've been subsidizing it with taxpayer bailouts to keep it afloat.
All this is to say that private insurance is literally incapable of insuring against flood damage, so you can't blame them for any of this. If you want to blame someone, blame Trump for rolling back standards that would have allowed FEMA to consider climate change in their risk models.
Their entire business model is fucking people over.
That would require good governance, appropriate oversight, and consumer activism. Unfortunately Florida man has no interest in these things.
I had flood insurance for a long time, in a non-flood zone. It was cheap and it made sense since storm water sometimes runs across my back yard.
Until one day I thought we got close to needing to use it. I spoke to somebody at the insurance company and got to know my policy on my own a bit.
It doesn’t matter how bad my house might flood. A flood claim would not matter unless either a 2 acre area flooded or a neighbor’s house had a nice flood claim too.
Lot of fucking good that does for somebody with a small yard who lives on a hill! I actually got rid of the policy years ago.
Insurance fraud cuts both ways.
Yeah, that sounds about right. People think there's a standard "full coverage" and then when something happens, suddenly the insurance company wants to make sure you understand the policy.
Taking those calls must be heartbreaking (though I'm sure the higher ups could care less).
Yea it's full coverage the way heath insurance is full coverage, eyes, teeth and mental health are not included. It's fucked up
Another thing to know about ahead of time is replacement cost coverage. I knew something that only had cash value coverage for their roof in addition to an $8000 deductible. They got a check from the insurance for about $200 and had to pay the rest out of pocket.
That is way too common. With how expensive everything is, people can't afford to really protect themselves. Shit hits the fan and they have a crazy deductible and the most basic coverage because that's probably still $100 a month. You find out that paying your premiums was no better than setting that money on fire every month.
Hmmm, I don't get this. Usually if you're in a flood area the mortgage company requires flood insurance. If you don't get it, they get it for you and send you the bill.
But as most are saying, it's a scam. They will tell you you have flood insurance without mentioning that there are three different kinds of flood damage. Rising water is the one most of us think of, but there is flood damage cause by plumbing issues and finally wind driven water. To a home owner, it's water damage. To an insurance company it's an opportunity to either charge you three times or deny your claim.
It's great!
Asheville is in the mountains, one of the reasons it was such a big story is that no one expected Asheville to flood. I'm not surprised almost no one up there has flood insurance.
Flood areas are defined as somewhere where there's a 1 in a 100 chance of a flood happening. The problem is all the calculations for that are based on historic data, which is to say they don't take into account climate change.
I would expect that it wouldn't be considered a flood zone if it took a hurricane to flood it.
It's the dental of home insurance.
We carry flood insurance, it's cheap if you are not in a flood zone.
But the home insurance in Florida is mostly just a scam to suck money out of the state. Company is incorporated, funnels money from policies into the pockets of the rich, then they go bust and fail to pay claims. Then the same people start all over with a different name. While cherry picking policies and leaving the riskier for the state to insure.
If Florida would kick all the insurers out and put everyone on Citizens it would be better. I really only feel "insured" when we fall onto the state plan; and if I had a spare half million you bet I'd self insure and get an umbrella policy for liability, not keep paying those assholes for nothing.
Insurance is a straight up scam. In every case.
Nah, in this case I blame the government for not having clearer regulations and a lack of informational programs.
Maybe all insurance should cover floods - but if we wanted that we'd need to regulate it... these policies were sold without flood insurance and it's quite likely the sellers tried to aggressively upsell them to also get flood insurance.
Maybe the insurance should be government run but we need insurance - health insurance is a scam because it's a fucking fake market, but housing insurance has a healthy market and insurers that reneg on their contract get taken to court and pursued by some truly asshole lawyers... you might argue that falsely denying a claim should come with higher penalties (and I'd agree) but half our government thinks regulations are the fucking devil.
Insurance is an inherently good idea - if we shuffled things up so that none of these people had any insurance then we'd have foreclosures and homelessness across the south right now - insurance companies are dicks but insurance is a good thing to have.
How can insurances make billions of profit if it isn't a scam?
Isn't it supposed to be a system to share the cost of damage, not to rip off people?
Yup, it certainly rakes in excessive profits - but the core concept of insurance isn't a scam. It's a good idea that gets abused in the American market.
How the heck is that even possible? I was forced to get flood insurance on a house that's nowhere near an ocean just because there is a stream nearby that almost never even has water in it. Getting a damn LOMA processed is confusing as all hell. Do 90+ percent of people not have a mortgage or something?
That's so weird because my house is literally on a lake and I didn't have to get flood insurance. I had to look up all of the flood maps and saw that the chance of flooding is once every 1000 years.
NOAA (I think) updated flood predictions and the flood line moved slightly toward my house. Still no flood insurance required.
Some of those people who did have flood coverage will only have it because they have a mortgage and were legally obligated to buy it as a condition of getting a mortgage (that is, it protects the mortgage lender's equity). It looks like the federal government requires people who live in a flood risk area and get a federal mortgage to buy flood insurance, for example:
https://sgp.fas.org/crs/homesec/R44593.pdf
An area of specific focus on the FIRM is the Special Flood Hazard Area (SFHA). The SFHA is intended to distinguish the flood risk zones that have a chance of flooding during a “1 in 100 year flood” or greater frequency.
Any federal entity that makes, guarantees, or purchases mortgages must, by law, require property owners in the SFHA to purchase flood insurance, generally through the NFIP.
What insurance company in its right mind is offering flood insurance during a climate apocalypse?
Sounds like the preexisting conditions situation. We need Obama 2.0 to make Obamainsure
What would actually happen if there was $100,000 of damage or more to like 100,000 houses in that area. FEMA only pays less than $50k. And according to the studies they always talk about, most people don't have $50k to fix their house. Would they just be homeless? The mold growth from all that water would make the houses unlivable.
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