Flood Insurance

Private Flood Insurers Chastised for Not Insuring Houses Likely To Be Flooded

It's simple: You should not build your house in places where you can't get private flood insurance.


"Insurers cherry-pick homes, leave flooded ones for the Feds," runs a very odd headline over at E&E News. The article goes on to explain, "Taxpayers could be forced to spend billions of dollars to bail out the federal government's flood program as private-sector insurers begin covering homes with little risk of flooding while clustering peril-prone properties in the indebted public program." Well, yes.

The E&E News article misses the exquisitely simple point made in this 2012 New York Times op-ed:

Homeowners and businesses should be responsible for purchasing their own flood insurance on the private market, if they can find it. If they can't, then the market is telling them that where they live is too dangerous [emphasis added]. If they choose to live in harm's way, they should bear the cost of that risk — not the taxpayers. Government's primary role is ensuring the safety of its citizens, so the government's subsidizing of risky behavior is completely backward.

E&E News notes that private insurers paid out only a small proportion of the flood claims made after recent major hurricanes in Florida and Texas. This suggests that the companies are good at assessing flood risks.

The E&E News article strangely claims that "an increased number of people with flood coverage could help reduce flood damage by making homeowners more aware of their risk." Of course that's right, but not being able to purchase any flood insurance at all would be a much more effective and compelling way to make homeowners aware of their risks.

Both the Trump administration and climate activists want flood insurance rates to reflect the actual risks faced by homeowners. That's exactly what private insurance can do best.

Instead of decrying private insurers for sensibly refusing to cover houses located in high-risk flood zones, the E&E News article should instead have been arguing for ending the government's National Flood Insurance Program altogether.

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  1. This is very important as only the highest peaks of the Rocky Mountain Range will be outside of flood zones by 2025.

    Or so I’m told.

    1. If I remember correctly what I learned from WaterWorld (pretty sure that was a documentary by Al Gore), only the peaks of Mt Everest will be safe.

      1. in all seriousness, i think the upper limit for sea level rise is like 200 feet or something.

        gives me about 800 to go. i’ll shed a tear for NJ i suppose..or not

  2. I’m sure private insurers would be happy to cover any property owner – if they could set the rate. Everything has a price.

    1. They won’t even bother writing a high premium policy adjusted to the risk profile because they an offload the variability onto a government program. So as usual, Ron has his head up his ass to the point of nearly reversing cause and effect. The insurers wouldn’t refuse to write policies in a normal market, they’d just price them according to risk.

      1. Man, have you got a problem! No wonder you’re a libertarian, everyone else thinks your brain just doesn’t work.

        1. It was already perfectly clear that you are a hopeless retard without you making a nonsensical reply devoid of even of a coherent insult to prove it.

          In the absence of government subsidized flood insurance the private market would not cease to write policies in high risk areas. That is quite possibly the dumbest fucking thing ever written. The reason they don’t write them now is because it’s a lot easier to manage a risk pool with substantially no risk, and the government will absorb the high risk pool so they don’t have to deal with it. If the government insurance disappeared tomorrow they’d start writing high risk policies with high premiums, the premium would be factored into property prices, and people who almost certainly continue living in flood-prone areas. Particularly the ones near coastlines where the average sales price is north of a million.

          1. And why exactly does that show Bailey has his head up his ass? All his is saying is that the government should not be subsidizing flood insurance and that private insurers can do it better. Who really cares if they won’t insure or will have high premium insurance. The main point is that government shouldn’t be subsidizing flood insurance.

          2. Zeb and JoeJoe have already explained it better than I can. My over the top insult was meant to be over the top, because your rant was also over the top — the difference between not offering anything and offering policies so expensive that nobody buys them is a distinction without a difference.

            I bet for enough money I could get Elon Musk to fly me around the moon. What’s that you say, he doesn’t offer that? Oh ho, now you’re catching on.

          3. And people, looking at the price of that insurance, would either build somewhere else, or to to the trouble of building appropriately. You can see them along the coast here in S.C.: Houses up on pilings along the beach, with parking underneath. The storm surge just goes right under them, damaging next to nothing.

            You can almost always avoid the need for insurance against a natural disaster by simply building appropriately. Floods, earthquakes, fires, hurricanes. You can even build a house to shrug off a direct hit by a tornado, it just won’t look like a conventional house.

      2. The only mistake I see is saying that insurers will refuse to cover properties in high risk zones. It is more likely that they will offer coverage, but at rates that will discourage development and lower property values in risky areas.

        1. Or they’ll make you put your house on stilts. You can find houses in the Louisiana swamps that never flood because they’re 20 feet above the water.

  3. A flood zone is a pre-existing condition! What sort of heartless bastard wouldn’t sell an insurance policy for a pre-existing condition? You just want people to die.

    1. Or at least get wet.

  4. In CA, the private insurers are under fire (sorry) for canceling policies and/or raising rates:

    “Column: California’s fire insurance market reaches a crisis”

    Hiltzik is supposedly a “business columnist”, but it seems he’s a “columnist” who is required to write about subjects which are a mystery to him.

    1. You misspelled ‘communist’ – – – – – –

      1. He’s a columnist, all right. A fifth columnist.

  5. Next Up:

    Why should health insurance companies allow people with pre-existing conditions to obtain health insurance at any price?

    1. One reason I can think of is that lots of people have pre-existing conditions and excluding them entirely might reduce the insurers’ customer base a lot. In a hypothetical free market for healthcare.

      1. If I’m going to assume the risk for an event that I know for a fact is going to happen, then what I’m doing isn’t insurance it’s charging you in advance for services performed.

        1. Which is a service some insurance companies might want to offer in a free market. Too bad we’ll never get to find out.

          1. Perhaps, although you’d need to be retarded to pay inflated prices for something you’re paying out of pocket for anyway. Some people are retarded though, so perhaps there would be enough rich and retarded people that want to pay double for the same thing.

        2. Well, the dirty secret is that health insurance isn’t really insurance at all. As currently practiced in the US, most health “insurance” is really just a bulk-buying program.

    2. Cuz they vote?

    3. Health insurance and flood/fire insurance are different in people’s attitudes toward them.

      There is significant support for pooled risk for healthcare costs. Libertarians may not like it, but that’s the way it is.

      There is significantly less support for pooled risk for home building in flood zones.

      1. “…There is significant support for pooled risk for healthcare costs. Libertarians may not like it, but that’s the way it is…”

        So long as the pooling is voluntary, I have no idea why those favoring libertarianism would object.
        I buy medical insurance knowing full well it is a sort of a bet on the average medical care costs.

  6. It’s simple: You should not do things you can’t afford.


    1. But I NEED my cocaine!

    2. What is this “afford” concept?

  7. The fact that your prescription drug plan doesn’t cover cocaine is proof Republicans hate blacks and poor people.

  8. I’m not in a flood plain, but I have flood insurance because we are on a hill and with very heavy rains (tropical storms) the water gushes onto our property ad we have 4 to 6 inches of standing water in the front yard. At first, I didn’t realize that my insurance company routed me to the federal program. I think private insurance could give me a policy for less that with the feds.

  9. “The E&E News article misses the exquisitely simple point made in this 2012 New York Times op-ed:
    Homeowners and businesses should be responsible for purchasing their own flood insurance on the private market, if they can find it.”

    One assumes the Times op-ed writer who said this was summarily fired for not explaining why the government could do insurance better.

  10. “It’s simple: You should not build your house in places where you can’t get private flood insurance.”

    As someone who actually develops real estate in several states, this is typically not permitted today. I’ve had developments halted because portions of the parking lot were in a 1% flood zone. Banks usually won’t loan on it either.

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