The
people of New York and New Jersey, the two places with the most destruction in
terms of dollars, are now filing their insurance claims, which most of us would
after such an event. But many people are finding that their insurance companies
are reluctant to pay up for this super storm. People with hurricane insurance
may think that they are protected from the floods that usually follow, but are
shocked to learn that only wind related damaged is covered. To obtain
flood insurance, the most common way is to buy a separate policy from the
federal governments’ National Flood Insurance Program. If you were smart enough
to purchase flood insurance through the federal government then you may
have been lucky enough to escape dealing with insurance agents who make it
difficult for you to collect your insurance check. But even the federal
government is not without problems.
The annual budget allotted for disasters in
FEMA's budget has in recent years fallen short of the claims made. With
hurricane sandy we see the same problem. So far the insurance claims have rise
to 17.7 billion dollars, compared with only 3.5 billion that the federal
government receives in premiums. This raises the debate on how accurate are
these costs associated with flood insurance policies. Granted this was a freak
of nature storm that caused excessive amounts of damage, but the ratio seems
unreasonable. Insurance companies go bankrupt all the time over selling polices
for to little and then not being able to cover the claims, so why is our own
government in that position. Others argue that those on the east coast should
receive less aid than what they have already gotten based on the fact that the
east coast is known to have this time of extreme weather. Those people living
there made a choice to accept the risks associated with that area, but are now
relying on the government to pay for all the damage. The events that cost
the federal flood insurance program the most money are repeat events, most
notably areas built in flood plains. The problem is that when these houses are
destroyed or damaged through flooding because they are located on a flood
plain, they end up getting rebuilt in the same spot. So now in a couple years
down the road, the same flood will happen, or maybe one at a larger scale, and
the whole cycle repeats itself.
Sources: http://www.nytimes.com/2012/11/11/realestate/reconsidering-flood-insurance-after-hurrican-sandy.html?pagewanted=all&_r=0
http://www.usatoday.com/story/news/2012/11/27/sandy-insurance-complaints-new-jersey/1728999/
http://www.nytimes.com/2012/11/13/nyregion/federal-flood-insurance-program-faces-new-stress.html?pagewanted=all&_r=0
