We note a troubling rumble suggesting that insurance companies may drop coverage because of regional disasters. This should not really be news to anyone, since insurance is strictly a matter of numbers. Insurance coverage must bring in more premium dollars than are paid out due to claims. If this relationship is reversed by "adverse experience", the company will surely go broke if coverage continues. Occasionally a whole state or region is affected by a series of storms, and insurance companies may even pull out entirely. We have a few references that ought to provoke thought, particularly for property owners in coastal or other known-hazard areas. Since insurance rules vary widely from state to state, and certainly from country to country, we encourage policy holders to make careful inquiry and be certain of the conditions their policies will cover. After the disaster strikes is not the time to be served with an unpleasant surprise.
From Insurance Journal: In this era of unpredictable weather patterns, Lazzari’s case is not unique. Insurance companies are raising rates, cutting coverage, balking at some payouts and generally shifting more expense and liability to homeowners, according to reports from the industry and its critics. “Insurance companies have significantly and methodically decreased their financial responsibility for weather catastrophes like hurricanes, tornadoes and floods in recent years,” the Consumer Federation of America said in a statement after studying industry data.
From WEAR TV: FLORIDA - FEMA is warning Governor Rick Scott that if he signs a new bill, millions of Floridians could lose their flood insurance. The bill would allow local authorities to issue new building permits without regard to state or federal guidelines notice or approval.
Flood insurance crisis looms in some areas
From New Orleans City Business: For Realtors, flood insurance coverage in Southeast Louisiana can be a challenging part of the sales process. “It can actually take someone out of affording a certain dollar-value,” said Renee Ferrera, CEO of Keller Williams Realty Crescent City Westbank Partners. Ferrara noted that the cost of insurance can in some cases be upwards of $200 to $400 a month, a pricy addition to the average homebuyer’s already-delicate mortgage equation. “It can kick somebody out of their loan-to-value,” she said.
From BIRSA: That inundation can come from an overflow from a body of water, a ârapid and unusualâ accumulation of surface runoff, a mudflow or the collapse of a shoreline. Flooding does not include water entering the house through a damaged roof or wall, a backed up sewer or broken pipes inside the house. Flooding can occur anywhere. In fact, nearly 25% of all flood insurance claims come from properties located outside a high-risk area for flooding. If you live in an area that gets rain, you can have a flood.
From The Advocate: People just brought into or just removed from a special flood hazard area have important decisions to make. Those added to a flood hazard area can take steps to avoid having to purchase a policy. They can hire a surveyor to shoot elevations on their homes to see if the houses really do fall within the elevations for which flood insurance is required. Another option, if they are financially able, is to pay off their homes and avoid the mortgage company’s insurance requirements. Either choice involves a couple of calculated risks.