Protecting The House!
There is a saying, “Water is Life!” We cannot survive without water after a few days. Look at the situation in Texas right now. Too much water leads to death and destruction. Rockaway learned that from Super Storm Sandy and to a lesser extent Hurricane Irene.
On August 29th, 2005, Hurricane Katrina ravaged the gulf coast near New Orleans, in Louisiana, Mississippi, and Alabama. There were 1836 fatalities as 175 mile-per-hour winds brought widespread destruction, flooding and left millions homeless. The damage was estimated at $125 Billion, which has made it the costliest storm in U.S. History! There were many complaints about how the Federal Emergency Management Agency (FEMA) responded.
Hurricanes Katrina, Harvey, and Irma wiped out FEMA’s coffers! In 2017, Congress bailed out the NFIP (National Flood Insurance Program) with $16 Billion in debt relief!
Scientists say these natural disasters and flooding will get worse because of:
Part of the current problem is that the premiums are determined by the amount of insurance purchased for the home, instead of the replacement cost. An example best clarifies this. The owner of a $2.5 million mansion with the same risk as a $250,000 home pays the same premium even though repairing the mansion would cost significantly more. In other words, expensive homes are paying too little and inexpensive homes are paying too much. There are also disparities at the edges of the flood map zones.
According to USA Today, on October 1st, 2021, thousands of homeowners in the riskiest of locations across America will be facing massive rate hikes when The NFIP (National Flood Insurance Program) releases its “Risk Rating 2.0” program! For the first time, individual premiums will be tied to each property’s actual flood risk. This will level the playing surface so that properties with the biggest risk will pay the most.
The National Flood Insurance Program, implemented in 1968, provides approximately 95% of the country’s flood insurance, which includes about 5.1 million policies. The old system fails to accurately assess the “true risk” of flooding. Because of this, NFIP only takes in approximately $4.6 billion in annual revenue. While this sounds like a huge number, they provide over $1.3 trillion in coverage, which leaves them with excessive exposure. The new model should rectify some of this.
Currently, the National Flood Insurance Program Policy maxes out payouts at $250,000 (called dwelling coverage) for structural damage regardless of the value of the home. The limit on contents is $100,000, meaning the maximum you can collect is $350,000 regardless of the replacement value of your house and contents. Nobody knows this better than I since we lost our Belle Harbor beach house due to Super Storm Sandy! We had a positive claims experience with FEMA by following these 3 crucial claim tips:
My Top 3 Claim Tips Are:
FEMA’s existing flood zones will not be a factor in rates so those homes outside the flood zones could see a rate reduction. The new policies will calculate premiums based on each home’s replacement value and specific features. The claim triggers will also include a broader range of flooding events, such as tsunamis, heavy rainfall, and coastal erosion.
You may be asking yourself, what does this all mean?
For those of you who want more information or quotes, feel free to reach out to me at Rob@InsuranceDoctor.us Be Positive, Test Negative, and Keep the Faith!