Should flood damage be covered under the homewoner's policy?

Question

I am doing a presentation on this and I cant find any good relavent information. I am against flood coverage being mandated to purchase a home. Can anyone please assist?

Answer 1

No, it shouldn't be, for a WIDE variety of reasons.

Flood losses are less than 5% of the number of claims filed. MOST homeowners do not need flood insurance. If you make flood insurance part of homeowners, then you should ALSO make earthquake insurance part of homeowners policies, with the extra premiums. Also, the #1 liability claim on a homeowners policy is dog bites. 30% of dog bites are pit bulls. Although homeowners policies won't cover you if you have one, by the same arguement, everyone should be required to pay for (and have covered) pit bull dog bite liability.

The PRACTICAL reason why flood insurance shouldn't be mandatory on homeowners policies, is this: Insurance companies can't make money on flood insurance. That's why NONE of them sell their own. You can ONLY buy flood insurance through the government, because WHEN you have a true flood, it's not one person having it - it's 3,000,000. You don't HAVE a $100,000 flood incident - you have a $100,000,000,000 flood incident. One flood, and insurance companies would go broke.

The government underwrites the NFIP program (www.nfip.gov) and it can afford to sell flood insurance, because it has the entire US working population to draw upon for additional funds. AND, it can levy taxes on us, in many different ways, to get additional funds. Insurance companies don't have that "privelege".

Insurance companies know that. So, the LOGICAL thing for a company to do, if they were required to include flood coverage in their homeowners policy, would be to stop writing homeowners insurance in that state. Or in the city. Which they will do, if it's mandated that they cover flood. Once that happens . . . you get people that can't buy a house, because they don't have cash, and they can't get insurance for the mortgage. Then the housing prices crash, and WOW you have a big economic problem on your hands, starting with thousands and thousands of bankruptcy filings.

A mini situation like that is brewing right now in Florida. People with $100,000 homes are paying $5,000 to $7,000 for homeowners insurance, including wind (hurricane). They can't afford it. They're putting their houses on the market, no one will buy, because no one can afford the insurance. AND, the FL wind fund has been approved for an almost 60% rate hike. YIKES! That's not a typo - SIXTY PERCENT. So if they were paying $4,000 last year - no claims, that's $6400 this year. Insurance companies have been hit so hard on wind claims in Florida, that they don't want to write policies there. VERY VERY few companies still do, they're leaving in droves, because they're losing their shirts.

So, No, it's a bad idea to require flood coverage.

Answer 2

Flood will never be a peril that is automatically covered on a homeowners policy. If it were to happen, most companies would stop writing homeowners insurance. If they did write it the rates would be significantly higher than they are now regardless of whether you live in a flood prone area. The North Carolina Insurance Commissioner was asked that question and he said that he would approve flood to be covered in a standard homeowners policy after the other 49 insurance commissioners signed it into law. The markets won't allow it. If you want to bring up the question about flood being a covered peril why not include earthquake coverage. Earthquake is not a covered peril in a homeowners policy. Should it be? Of course not.

Answer 3

This is just my opinion: A homeowner's policy should either cover everything, OR if it's not going to, they should offer coverage cafeteria style - a wind policy costs this much, fire costs this much, flood costs this much, etc.

I do think that mandatory flood insurance in flood-prone areas is a good idea, but the option to not have it should be available. The catch would be that if you are in a known flood zone and you choose to opt out of the coverage, you would not be eligible for any type of government assistance if you end up flooding. Everyone should not have to share in the burden - at least not to that extent. But as someone above said, no law says you have to have it; it is the mortgage companies that do, and as private lenders they can refuse to lend to you.

Answer 4

The flood exclusion in HO policies is pretty solid and I don't think there is any chance of insurers changing their minds.

As for Flood Insurance being mandated, the only entity that would force a person to buy this coverage is a bank, and they only do that when you are in a flood zone. In that case you probably really need to have the coverage.

This coverage, in my opinion, should not be included in HO policies. Not everyone is at risk for flooding exposures. Why should they have to help those at risk to pay for it?

If you want to avoid purchasing flood insurance, buy a house on higher ground!

Answer 5

Should but its not.. Even if the water leaks into the basement of the home due to strong rain, that wouldn't even be covered. Generally any type of ground water damage is not covered, unless you have specific flood coverage thru you insurance, or thru the federal flood coverage plan..

Answer 6

Flood damage is specifically excluded in homeowners policy. If you want Flood insurance you have to purchase an endorsement or separate policy specific for flood damage.

Answer 7

Flood damage is excluded from homeowner's insurance and is only mandated to purcahse a home that is a flood zone. You don't have to buy it if you are not in a flood zone.

Answer 8

It should be but it's not. You have to have a separate policy for flooding. You only have to have flood coverage if you live in a flood plain.

Answer 9

yes it should atomatically be included when you buy a policy,it covers for flood,theft,fire,if a tree fall on the house, you can always do add an endoresment ex: if you have lots of expensive jewelry in the home,recently replaced the plumbing that too can be covered but you have to add the price of it in order to be covered,

Answer 10

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