Better Flood

As an Expert in flood insurance, we are uniquely positions to shop all flood policies to date for our clients both private flood and the NFIP.

We also see the confusing wording and the CYA tactics local government, lenders, and insurance companies have created to address the unclear direction in the law and guidelines specified in regards to private flood insurance. And this issue seems to be one more point of political divisions in our current governmental climate.

The NFIP (National Flood Insurance Program 1968) was created as a way to address the number one natural catastrophe we as Americans face. The program’s language was written to “help get property owners back on their feet after a flood” (of course I am paraphrasing and using language that all we understand because the law is written in the Lawer unique non-sense language). FEMA and NFIP officials point again and again to the fact that the program was never created to return properties to WHOLE (a term used in insurance that means to put your property back to how it was prior to the loss).

FEMA and NFIP officials point again and again to the fact that the program was never created to return properties to WHOLE (a term used in insurance that means to put your property back to how it was prior to the loss), but rather help them recover after a flood loss.

FACTS are that the NFIP was the only player in the flood insurance market for 50 years because there was no competition and that consumers who live in high-risk flood insurance are essentially forced to purchase the policy whether they wanted it or not. They were able to create a policy that kinda covers properties and able to set premium rates, that have no push back beyond who can scream loudest on capital hill and who can influence law makes the most to “map certain areas out” of these high-risk zones. Which have two effects on the program?

One it has given property owners a false sense of security about the true risk of flooding., and two it has given properties access to subsidized premiums because they were mapped into a zone that allows the rate to be much more favorable.

Two it has allowed properties access to subsidized premiums because they were mapped into a zone that allows the rate to be much more favorable.

The arguments that some of our government officials are using to delay reform on opening up the private flood insurance market and bring competition into this struggling program is “The private flood insurance will  “cherry pick” the best policies, leaving the properties most at risk in the government program.”

Flood Insurance in New Mexico

If helping a homeowner that lives in New Mexico who is paying $5,000 (that’s right thousand) for flood insurance every year, even though the property has NEVER FLOODED and well it is not prone to flooding as in (so far) hurricanes don’t strike New Mexico.

The NFIP policy is a one size fits all policy meaning that if you live in a high-risk flood area you are going to pay this premium regardless of if that is a true assessment of the risk you have. So a property that is ocean front will pay the same price as a property that is in a desert. This means there are many who are paying more than their fair share of the premiums and more than a few that are not paying the amount they should due to the risk they have.

You see the NFIP has subsidized flood insurance for properties many years,  a MILLION DOLLAR home on the barrier islands of Florida is paying $350 dollars a year and a property in New Mexico is paying $5,000 a year. If cherry picking is the argument my pushback is why not just charge a fair rate for the risk? Seems like it would make sense. And I believe that the private flood insurance market will get this close to the reality.

Florida flood insurance premium

Private flood insurance policies are typically much less than the NFIP premiums (especially in the example of the property in New Mexico mentioned above) because they are using a more sophisticated underwriting program that is state of the art and is assessing the risk to charge what they believe is an accurate rate due to the risk.

This is what I believe without a doubt that the private flood insurance would do balance the market charge properties a fair rate for their properties risk. Sure that the people who live on an island will cry that the program is unfair if they have to pay more for their flood insurance. Ah…. your home is beautiful but aren’t you worried about flooding? Of course, they are they live on an ISLAND that was created to protect the mainland from Hurricanes.

Ah…. your home is beautiful but aren’t you worried about flooding? Of course, they are they live on an ISLAND that was created to protect the mainland from Hurricanes.

Here is how I foresee this playing out. Private flood insurance will open up the market, it is going to happen it has too because the government program is likely to be so far in debt that the issue cannot be ignored anymore.  Properties that are at most risk for flooding will pay higher prices some of them extream for a few years then the private market will develop a way to

Private flood insurance will open up the market, it is going to happen, and to a small degree already is.  Something has too change because a government program is likely to be so far in debt that the issue cannot be ignored anymore. (program was 25billion dollars in dept prior to Harvey and Irma)  Properties that are at most risk for flooding will pay higher prices some of them extream for a few years then the private market will develop a way to

Properties that are at most risk for flooding will pay higher prices some of them extream prices for a few years then the private market will develop a way to insure these properties that is just how it works. And then maybe the government can gracefully bow out of the flood insurance as a whole. Sure builders may not be draining swamps anymore to build in them because they won’t be able to have the government blanket covering the building in areas where we simply shouldn’t build due to risk.

And then maybe, when the market has balanced, our government can gracefully bow out of the flood insurance as a whole.Sure builders may not be draining swamps anymore to build in them because, or might need to add extra feet to the foundations in order to build,  buildings up higher so that the flood losses are less likely. They won’t be able to have the government blanket covering and will take this into consideration prior to building in risky areas.

Sure builders may not be draining swamps anymore to build in them because, or might need to add extra feet to the foundations in order to build,  buildings up higher so that the flood losses are less likely. No private flood insurance company will insure a risk that is well too risky.They won’t be able to have the government blanket covering and will take this into consideration prior to building in risky areas.

Builders won’t be able to have the government blanket covering and will take this into consideration prior to building in risky areas.

The issue then will be “what do we do with the properties that are flooding every other year? and likley won’t be able to get any other flood insurance than the one offered by the government” I have a few of these too and this is a bit more complicated. However, I think that the cost would be much less for the government to just buy the property at a fair price and allow the owner to find another area that is less risky. This would be so much cheaper than paying them $50,0000 – $70,000 for every flood loss. Five losses

This is a bit more complicated. However, I think that the cost would be much less for the government to just buy the property at a fair price and allow the owner to find another area that is less risky. Remove the structure and put a ban on building in that area.  This would be so much cheaper than paying them $50,0000 – $70,000 for every flood loss. Five losses is about $350,000 you can get a nice home in most places for this amount of money.

As a side note we were able to help the property in New Mexico getting them a policy for about $850 saving them $4150. This in my opinion is fair. Can we help you? 866-9907482

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