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Published: Tue, September 05, 2017
Economy | By Melissa Porter

Lisa Craig: Why flood insurance is not just for a rainy day

Lisa Craig: Why flood insurance is not just for a rainy day

"I'll just get money anyway."Many people avoid buying flood insurance because they assume that if a really big storm hits, federal disaster aid will cover their damage". Estimates are that 80 percent of the resulting losses are not covered by flood insurance. "That will be the national flood insurance policy that you needed to purchase extra".

"Every time you take away dirt and put concrete and asphalt in its place, you're going to exacerbate a problem", said Rep. Jeb Hensarling, R-Dallas, chairman of the House Financial Services Committee. "We encourage everybody to file [a claim] as quick as they can", says Andrew, who has clients with property in Houston.

"The imperative to get it reauthorized, I think the exclamation point has been provided by Harvey, but we didn't need Harvey to tell us how important flood insurance is", says Louisiana Governor John Bel Edwards. The Federal Emergency Management Agency provides homeowners with flood insurance through the program, which was established by Congress in 1968 because most private insurers had stopped offering flood policies, according to Schumer.

Further, the NFIP should cut program subsidies.

Laws regulating construction of homes in and around the floodplain will determine how often some of them may be rebuilt.

What both Republicans and Democrats have toyed with over the past decade is bringing premiums in line with the actual risk of flooding - shoring up the NFIP's finances while in effect encouraging people to move out of flood prone areas. And with storms rising in frequency and intensity due to climate change, that gap is only expected to increase.

The map doesn't yet represent all the flooded areas, and for technical reasons, it likely understates the extent of flooding.

The most a policy will pay for damaged belongings altogether is $100,000.

Close to 40 percent of Americans lived within 50 miles of the coastline in 2010, a figure that is only growing, according to the National Oceanic and Atmospheric Administration. Another half-million residents live in moderate risk areas, the 500-year flood zone, where the likelihood of flooding is between 1 and 0.2 percent each year. Furthermore, Houston area residents will begin filing insurance claims and receive payouts to buy new cars.

But two years later, facing angry constituents, Congress delayed the most draconian segments of the legislation, said Laura Lightbody, director of The Pew Charitable Trusts' Flood-Prepared Communities project.

Farmers Insurance has already received more than 22,000 claims for Harvey damage, its spokesman Luis Sahagun said.

Beware of contractors who ask for a large amount of money up front, and contractors whose bids are very low - they might cut corners and do shabby work. Hurricanes don't have to be more frequent or more intense.

Carriers with strong balance sheets, conservative premium to surplus levels and strong reinsurance programmes are well-positioned to manage Harvey's impact, however, regional insurers with exposure concentrations and less reinsurance programmes could be vulnerable to losses. Banks require flood insurance for property under mortgage, but governments pass on recovery costs to taxpayers rather than requiring insurance.

And living again. The federal government is getting 900 calls an hour from storm and flood victims.

Hensarling described the legislation as "a beginning" in making the NFIP solvent.

Coincidentally, the program is due for reauthorization on September 30.

Recent history, alas, doesn't make us optimistic: Congress did reform the program on a bipartisan basis in 2012, only to see much of that undone under pressure from coastal-state lawmakers in 2014, after Sandy.

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