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New Texas law may cause problems for some Harvey claimants (WSJ)

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Most important part:

"Many Texas homeowners and businesses with property damaged by Harvey are under the gun to file insurance claims before a new law favorable to private-sector insurers kicks in Friday.

The new Texas insurance law includes changes that affect what happens to a claim that ends up being litigated in court. Among the changes are a sharp reduction in compensation for plaintiffs’ lawyers in cases where their clients are awarded significantly less than initially sought.

For Texans, the law complicates the claim-filing process under ordinary homeowners’ and business policies. As a result, some consumer advocates are encouraging policyholders to file claims before Friday to avoid coming under the law."
 
more: https://www.wsj.com/articles/new-texas-insurance-law-will-complicate-matters-for-some-harvey-claimants-1504030570

P.S. Heartfelt good wishes and prayers for those in the FWF Family affected by this disaster.

ETA:  Just to clear, this has nothing to do with the the National Flood Insurance Program. It relates to claims under private sector property and casualty insurance policies. 

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I imagine this is going to be another Katrina. Flooding in areas previously thought unlikely to flood, convincing many to go without flood insurance.

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maybe the TX should come into emergency session to repeal this law .

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After Katrina, did everyone start getting flood insurance in the New Orleans area?

Were the flood zone maps revised to include pretty much everything?

I personally find flood insurance to be vastly mispriced by FEMA in most cases. High risk properties are priced too low, while low risk properties are priced too high. So if everybody is getting insurance in New Orleans now a days - then the high risk property owners are getting subsidized big time.

I think aftermath of Katrina would be a good guide to set expectations as far as insurance stuff goes for hervey.

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Tangential observation - This mis-pricing should open up interesting investment opportunities over the mid and long term in the low risk areas for people who can pay cash and self insure!!


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Evidence of mispricing - my own house is in a designated flood zone, and without going into gory details, is unlikely to experience a lot of losses unless there is hervey-like rain (which is, for insurance purposes, unlikely). Even if there is total loss - the FEMA premiums, invested and returning 8% can rebuild my house every 20 years or so. Fortunately, I can get private flood that is 40% cheaper than FEMA - still overpriced because of zero competition, but better than FEMA.

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the best flood insurance is not living in or near a flood zone

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rufflesinc said:   the best flood insurance is not living in or near a flood zone

A very large portion of flood losses occur outside designated flood areas.

Example(s):
1. Colorado flooding in 2013 (or was it 2012?)
2. Katrina
3. Hervey

In your regular, expected flooding - actual structural losses are rare. Most houses in flood zone are also built to withstand regular flooding (elevated, no below ground basement, tiles in lower floor instead of hardwood etc etc).

Not so during these freak events which hit everywhere - flood zone or no!

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I don't know how you think Katrina and Harvey losses were unexpected. They were on the coast of the gulf of Mexico

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puddonhead said:   After Katrina, did everyone start getting flood insurance in the New Orleans area?

Were the flood zone maps revised to include pretty much everything?

 

  
Flood insurance rates in New Orleans did go up after Katrina but then dropped some after: 

http://www.theadvocate.com/baton_rouge/news/article_8c8255ec-633...

"d the New Orleans metro area has the highest rates of flood insurance participation. When Hurricane Katrina struck the area, there were 360,000 business and residential flood insurance policies. That climbed to a peak of 500,000 by 2008 but has since fallen to 450,000, 340,000 of which are residential."

At least one source here's saying that flood maps in New Orlenas changed as improvements were made

https://www.nola.gov/mayor/press-releases/2016/20160913-pr-fema-...

"more than 53 percent of all properties in New Orleans were removed from Special Flood Hazard Areas (“A” zones”) "

But I don't know how much thats really telling us.     Seems clear though that they didn't just change all the flood maps to make everything high risk simply due to Katrina happening.    I think that would be contrary to the methodology of those maps.
 

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<clarification> responding to ruffle's point above </>

Eh - that way everyone is at risk!

Near a sea - check!
Near a mountain - check!!
Near a lake - lake effect snow, errrr rain, anyone? We are talking about freak events here - remember!

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Low risk areas (i.e. Outside "flood zone"s) are usually only a few hundred a year in flood insurance.

So I personally think it makes sense to purchase it even if you are not required to by the lender.

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rufflesinc said:   I don't know how you think Katrina and Harvey losses were unexpected. They were on the coast of the gulf of Mexico
  

A lot of the flooded areas around Houston are 10 to 20 miles from the coast.

They are calling Harvey a "500 year flood".      So no, thats not really "expected".

 

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jerosen said:   
rufflesinc said:   I don't know how you think Katrina and Harvey losses were unexpected. They were on the coast of the gulf of Mexico
  

A lot of the flooded areas around Houston are 10 to 20 miles from the coast.

They are calling Harvey a "500 year flood".      So no, thats not really "expected".

 

a few years back, a friend of ours moved to houston.  at the time, I told my wife that its not a good idea due to hurricanes. I expected it.   The fact something is likely to happen but you don't know exactly when doesn't make it not "expected"

There are frequent hurricanes in the gulf of mexico. Houston is on the coast of the gulf. Duh

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puddonhead said:   <clarification> responding to ruffle's point above </>

Eh - that way everyone is at risk!

Near a sea - check!
Near a mountain - check!!
Near a lake - lake effect snow, errrr rain, anyone? We are talking about freak events here - remember!

  lake effect snow results in this level of flooding? No, only if the drainage system sucks

a couple years ago in metro detroit, we had a massive rain event. There were only two kinds of places that got flooded. The freeways that were below grade and houses in areas with old sewer systems that couldn't keep up (their basements had sewage backups), really only one or two specific suburbs that had the largest problems

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rufflesinc said:   
jerosen said:   
rufflesinc said:   I don't know how you think Katrina and Harvey losses were unexpected. They were on the coast of the gulf of Mexico
  

A lot of the flooded areas around Houston are 10 to 20 miles from the coast.

They are calling Harvey a "500 year flood".      So no, thats not really "expected".

 

a few years back, a friend of ours moved to houston. I told my wife then that its not a good idea due to hurricanes. I expected it.   The fact something is likely to happen but you don't know exactly when doesn't make it not "expected"

  

But it wasn't considered "likely" to happen.    

500 year flood plane is based on a 1 in 500 chance of a flood in a year.    Thats not "likely".   It may be an eventuality but its not likely.    
 

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puddonhead said:   
rufflesinc said:   the best flood insurance is not living in or near a flood zone

A very large portion of flood losses occur outside designated flood areas.

Example(s):
1. Colorado flooding in 2013 (or was it 2012?)
2. Katrina
3. Hervey

In your regular, expected flooding - actual structural losses are rare. Most houses in flood zone are also built to withstand regular flooding (elevated, no below ground basement, tiles in lower floor instead of hardwood etc etc).

Not so during these freak events which hit everywhere - flood zone or no!


Colorado was 2013. Very heavy rain for just over a day, after a moderately rainy week. Most direct flooding was adjacent to the many creeks in the area, but the flood also overwhelmed sewer systems and many basements were damaged when that overflowed. FEMA backed insurance has limits on what's covered in a basement, and ours held out with "that isn't flood damage".

FEMA policy limits are also a big constraint - a max of $250k coverage is a major limit for many areas, including upscale neighborhoods around those gulf cities.

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jerosen said:   
rufflesinc said:   
jerosen said:   
rufflesinc said:   I don't know how you think Katrina and Harvey losses were unexpected. They were on the coast of the gulf of Mexico
  

A lot of the flooded areas around Houston are 10 to 20 miles from the coast.

They are calling Harvey a "500 year flood".      So no, thats not really "expected".

 

a few years back, a friend of ours moved to houston. I told my wife then that its not a good idea due to hurricanes. I expected it.   The fact something is likely to happen but you don't know exactly when doesn't make it not "expected"

  

But it wasn't considered "likely" to happen.    

500 year flood plane is based on a 1 in 500 chance of a flood in a year.    Thats not "likely".   It may be an eventuality but its not likely.    

  oh cmon, you have katrina and harvey in just over a decade period.

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Estes Park, CO is 7000+ ft above sea level.

If that place can have entire neighborhoods swept away by floods - then any damn place on earth can flood.

And before anyone asks, yes I've been there a few months after the flood! So I've seen the unbelievable damage caused by it!

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rufflesinc said:   
jerosen said:   
rufflesinc said:   
jerosen said:   
rufflesinc said:   I don't know how you think Katrina and Harvey losses were unexpected. They were on the coast of the gulf of Mexico
  

A lot of the flooded areas around Houston are 10 to 20 miles from the coast.

They are calling Harvey a "500 year flood".      So no, thats not really "expected".

 

a few years back, a friend of ours moved to houston. I told my wife then that its not a good idea due to hurricanes. I expected it.   The fact something is likely to happen but you don't know exactly when doesn't make it not "expected"

  

But it wasn't considered "likely" to happen.    

500 year flood plane is based on a 1 in 500 chance of a flood in a year.    Thats not "likely".   It may be an eventuality but its not likely.    

   oh cmon, you have katrina and harvey in just over a decade period.

  

Thats hindsight.

Give the % probability that Corpus Christi, New Orleans, Tampa and Mobile respectively will have a major flood next year.

 

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jerosen said:   
rufflesinc said:   
jerosen said:   
rufflesinc said:   
jerosen said:   
rufflesinc said:   I don't know how you think Katrina and Harvey losses were unexpected. They were on the coast of the gulf of Mexico
  

A lot of the flooded areas around Houston are 10 to 20 miles from the coast.

They are calling Harvey a "500 year flood".      So no, thats not really "expected".

 

a few years back, a friend of ours moved to houston. I told my wife then that its not a good idea due to hurricanes. I expected it.   The fact something is likely to happen but you don't know exactly when doesn't make it not "expected"

  

But it wasn't considered "likely" to happen.    

500 year flood plane is based on a 1 in 500 chance of a flood in a year.    Thats not "likely".   It may be an eventuality but its not likely.    

   oh cmon, you have katrina and harvey in just over a decade period.

  

Thats hindsight.

Give the % probability that Corpus Christi, New Orleans, Tampa and Mobile respectively will have a major flood next year.

 

  Three years ago , I said houston is at risk of hurricane. boom. eat it.

And you'd have to pay me $1MM a year to live in any of those cities. And then I'd live there for a year, living in an studio apt with everything ready to haul ass. 

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I am unsure of the good and bad of the new law OP describes, but it sounds like if the lawyer does not do well, he gets paid less. I like the sound of that.

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You don't have to believe me, remember hurricane rita?

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TravelerMSY said:   I imagine this is going to be another Katrina. Flooding in areas previously thought unlikely to flood, convincing many to go without flood insurance.
  Does anyone who isn't required to have flood insurance have them just because?

I think TX will recover faster, NO got so much more other issues even before Katrina.

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I donated quite a bit to Katrina recovery, but Texas is on their own. Why the hell would I be sympathic to a state so hostile to anything not 'Texan'?

Chris Christy, while still a tool, is correct to call their senators hypocrites.

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SummerSoFar said:   I donated quite a bit to Katrina recovery, but Texas is on their own. Why the hell would I be sympathic to a state so hostile to anything not 'Texan'?

Chris Christy, while still a tool, is correct to call their senators hypocrites.

  everything's bigger in texas including the schadenfreude

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ZenNUTS said:   
TravelerMSY said:   I imagine this is going to be another Katrina. Flooding in areas previously thought unlikely to flood, convincing many to go without flood insurance.
  Does anyone who isn't required to have flood insurance have them just because?

I think TX will recover faster, NO got so much more other issues even before Katrina.

  

Yes, I do and I know many others who do.

TX will recover faster.  LA is very screwed up (esp NO).
 

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gremln007 said:   
  Interesting, I had thought that flood insurance is partly underwritten by the government.  

I asked about earthquake insurance here before, it was just not worth it, extremely high premium and high deductible.  I figure most of my house's worth here is in the land anyway.  However, if I ever do a major remodel I will spend a few $k more for quake reinforcement.

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What about the houses that were not in flood zones, and therefore didn't have insurance, but were flooded when the city released the water from the reservoir? Just curious how that's going to work out.

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puddonhead said:   
rufflesinc said:   the best flood insurance is not living in or near a flood zone

A very large portion of flood losses occur outside designated flood areas.

Example(s):
1. Colorado flooding in 2013 (or was it 2012?)
2. Katrina
3. Hervey

In your regular, expected flooding - actual structural losses are rare. Most houses in flood zone are also built to withstand regular flooding (elevated, no below ground basement, tiles in lower floor instead of hardwood etc etc).

Not so during these freak events which hit everywhere - flood zone or no!

  
Houston and New Orleans have always been flood zones as far as I was aware.   We saw Houston get major floods like 3 times in the last 2 decades.

That said, the floods that did just happen were much more than could be imagined.  I would have probably felt good buying a house on higher ground and further from the rivers.  I don't think that would have helped too much here.  There were quite a few elevated houses on stilts that got flooded.

 

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rufflesinc said:   the best flood insurance is not living in or near a flood zone
  Exactly right.  You are absolutely crazy if you chose to live by the coast, or near a river, or close to a lake. What crazy person would want to live there? Let's not stop at flooding, either. Move all those people out of Californa because of earthquakes. Throw in the entire midwest because of the risk of tornados and severe thunderstorms. To come to think of it, if you have trees by your house, you are at risk for a forest fire. And let's not forget all those places that are affected by drought every once in a while. Don't be stupid and chose to live there. 

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workindev said:   rufflesinc said:   the best flood insurance is not living in or near a flood zone
  Exactly right.  You are absolutely crazy if you chose to live by the coast, or near a river, or close to a lake. What crazy person would want to live there? Let's not stop at flooding, either. Move all those people out of Californa because of earthquakes. Throw in the entire midwest because of the risk of tornados and severe thunderstorms. To come to think of it, if you have trees by your house, you are at risk for a forest fire. And let's not forget all those places that are affected by drought every once in a while. Don't be stupid and chose to live there. 

Green for truth

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People see the horror that's unfolding in Texas and start talking about flood insurance, which is understandable. In reality, one of the biggest water-related insurance gaps that most people's homeowner's insurance has are water and sewer backups, which are frequently excluded by many carriers or are only subject to very low coverage sub-limits (like $10,000). To me, this coverage is absolutely essential and its practical impact in most situations is far greater than the existence or the absence of flood insurance (although the two are anything but mutually exclusive).

This is because when most people think of "flood," they think of Harvey-like situations with 4 feet of water gushing through their front door. I think that in many cases that's just not how floods happen. Instead, people experience localized water and sewer backups, or their sump pumps fail, interior drainage clogs up, etc.... In fact, I think that even in a Harvey-like event, a person who has a sump pump and whose homeowner's insurance does not have any restrictions on water and sewer backup coverage would have a reasonable chance of receiving complete insurance coverage for the losses even without flood insurance, because the cause of the loss is "water overflowing from a sump pump" and "water which backs up through sewers or drains," which is the typical insurance language used to describe water and sewer backups.

Hence, as an insured, when it comes to water coverage (and especially if you have a sump pump/interior drainage tiles), my #1 priority is to ensure that I either have no sub-limits on water and sewer backup coverage, or, if such a sub-limit is unavoidable, that I purchase an endorsement that allows me to increase coverage to very substantial amounts. I do not, therefore, even bother receiving quotes from insurance carriers that refuse to go above very low coverage sub-limits.

As far as flood insurance is concerned, the NFIP policy (and my understanding is that all standard flood policies sold by private carriers are NFIP policies, meaning that the contractual limitations are all exactly the same) not only has significant coverage gaps, but even its definition of flood is rather restrictive, which is "A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from overflow of inland or tidal waters, from unusual and rapid accumulation or runoff of surface waters from any source, or from mudflow." In other words, with a standard flood policy, if your house is the only one in the subdivision that "floods," you have no coverage. Many carriers, however, offer additional endorsements that build upon the NFIP coverage and offer significant coverage improvements. For instance, with such an endorsement you can be covered if your house is the only one that "floods," you can get much better coverage for the basements, etc...

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ZenNUTS said:   Interesting, I had thought that flood insurance is partly underwritten by the government.
It is, but you don't have to be in a flood zone to buy it, and, in fact, your insurance rates are determined by your flood risk. Lots and lots of people who are not in a flood zone have flood insurance, as a significant percentage of floods happen outside the flood zones.

Also remember that the definition of "flood" excluded from standard homeowner's policies is very broad and doesn't just apply to Harvey-like events. Instead, the exclusion applies, for instance, to ground water that seeps or leaks through your foundation, and surface water running down your foundation walls. In this case, as far as insurance is concerned, you are experiencing a "flood," which is excluded from standard insurance coverage. As I mentioned above, however, standard NFIP flood policies would not offer coverage in this case either, as they do not apply if you're the only house experiencing "flooding." In some/many cases you can, however, purchase an endorsement from your carrier that expands coverage to a single house and improves coverage sub-limits.

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riznick said:   
Houston and New Orleans have always been flood zones as far as I was aware.   We saw Houston get major floods like 3 times in the last 2 decades.
That said, the floods that did just happen were much more than could be imagined.  I would have probably felt good buying a house on higher ground and further from the rivers.  I don't think that would have helped too much here.  There were quite a few elevated houses on stilts that got flooded.

 

A lot of Houston areas were already flooding when they got 2-3 inches of heavy rain in a day. Not having insurance against flooding and sewer backup in those hurricane-prone coastal areas, was more wishful thinking than actually taking into account probabilities. And there were ample warning signs. After Rita 12 years ago, if you still claim that this was totally unexpected, you're in denial.

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puddonhead said:   Estes Park, CO is 7000+ ft above sea level.

If that place can have entire neighborhoods swept away by floods - then any damn place on earth can flood.

And before anyone asks, yes I've been there a few months after the flood! So I've seen the unbelievable damage caused by it!

Umm...it's a valley at the base of several mountains. Being below sea level is not a prerequisite for being in a high risk flood area.  

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jerosen said:   
rufflesinc said:   I don't know how you think Katrina and Harvey losses were unexpected. They were on the coast of the gulf of Mexico
  

A lot of the flooded areas around Houston are 10 to 20 miles from the coast.

They are calling Harvey a "500 year flood".      So no, thats not really "expected".

 

  I was going to get all mightier-than-thou and say "it's not the distance from the coast people should concern themselves with, its the elevation compared to sea level!"

And while thats true, the flooded areas were 50ft above sea level, the issue was the area is flat and water couldnt move away quick enough.  So in the future, all houses should be bought on a hill, no matter the elevation.

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rufflesinc said:   You don't have to believe me, remember hurricane rita?
  You clearly haven't looked into these hurricanes very closely. Hurricane Rita didn't cause anywhere near the extensive flooding of Katrina or Harvey. Katrina was a disaster because levees broke, and Harvey is a big deal because they got 50+" in 2 days. My parents house flooded and they're about 40 miles inland. And it only flooded because they had to do a controlled release of one levee that was overflowing.
Grue237 said:   jerosen;19956863 said:
rufflesinc said:   
  

A lot of the flooded areas around Houston are 10 to 20 miles from the coast.

They are calling Harvey a "500 year flood".      So no, thats not really "expected".

 

  Unless a city is on a sloping hill it's going to flood if it gets 50+" of rain.

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OK so I guess the take away from all this is that everyone should live on a hill in Michigan and have every form of insurance possible.

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Grue237 said:   
jerosen said:   
rufflesinc said:   I don't know how you think Katrina and Harvey losses were unexpected. They were on the coast of the gulf of Mexico
  

A lot of the flooded areas around Houston are 10 to 20 miles from the coast.

They are calling Harvey a "500 year flood".      So no, thats not really "expected".

 

  I was going to get all mightier-than-thou and say "it's not the distance from the coast people should concern themselves with, its the elevation compared to sea level!"

And while thats true, the flooded areas were 50ft above sea level, the issue was the area is flat and water couldnt move away quick enough.  So in the future, all houses should be bought on a hill, no matter the elevation.

  It's like basements in old houses.  Everyone just wishes they had spent the money and dug it out to 9 ft instead of 7 ft ceilings.

It's not even feet above sea level - it's feet above your surrounding property.  My childhood home was 5 ft above sea level, let we didn't get a drop of water during Hurricane Hugo.  Thats because the rest of the hood was 3 to 4 feet above sea level.  No amount of rain would have flooded our house yet the home literally three properties down flooded in pretty much every heavy thunderstorm.

You should have seen it during Hugo. It was like a medieval castle surrounded by a moat during the eye of the storm.

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Houston is like a kitchen sink. It doesn't matter how far above the city sewer it is, if the drain is plugged the water level will only go up. Houston sits in a bowl. Their elevation above sea level is meaningless. You cannot drain a bowl no matter how high you raise it.

Skipping 79 Messages...
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geo123 said:   
SummerSoFar said:   
geo123 said:   
SummerSoFar said:   As with everything, it depends. Here in Portland are, NFIP for most is often a X flood zone rate, thus very inexpensive relative to the level of coverages. But I have also found that any types of addl. endorsements are stupidly expensive. So that tells me that insurers don't want anything to do with the region for some reason, or NFIP has underpriced the risk, or both.
As I posted above, I am also in zone x unshaded, so I know exactly what you are talking about with respect to the inexpensive NFIP rates. The reason that the endorsements can be fairly expensive is because you are receiving coverage under the endorsements that is significantly more likely to be used.
  

  
FYI: Many years ago I remember adding a sewer backup endorsement to my USAA policy, but thanks to your comments just now realized that it had fallen off at some point. Seems that in the more recent past USAA had rolled it in as part of standard coverage.

https://www.usaa.com/inet/pages/insurance_home_renewal_difference

  For whatever reason the above link takes me to USAA 's login page. I would check to see whether USAA 's water and sewer backup coverage is subject to a sub-limit. A colleague of mine has USAA and his water and sewer backup coverage is subject to a $10,000 sub-limit, which to me is absurdly low. As I mentioned above, in a lot of cases just the cost of the clean-up alone (without any restoration) is going to be in this range and, depending on the damage, can be even higher.

If USAA 's standard homeowner's policies now include water and sewer backups with no sub-limits (meaning that you are covered up to your dwelling limit), then that's exactly what you want to see with respect to this coverage.

  


is a clogged drain/ Water Backup same as leak claim? 

here's the link above

Coverage USAA Standard Industry Standard
Additional Dwelling Coverage 25% of dwelling amount included unless rejected Yes, by endorsement and/or surcharge
Personal Property Limits 75% of dwelling coverage limit 50% of dwelling coverage limit
Full Replacement Cost for Personal Property Yes By endorsement
Personal Liability Limits $300,000 $100,000
Jewelry, Furs, Firearms, Silverware Limits $10,000 $2,000
Golf Carts $3,000 By endorsement
Business Property (on premise) $10,000 $1,000
Business Property (off premise) $1,000 $250
Lock Replacement $250 None
Identity Theft $5,000 included in policy contract By endorsement
Loss Assessment $10,000 By endorsement
Military Uniform and Equipment Personal Property Limit (no deductible) Covered with a deductible
Personal Property Loss Due to War $10,000 None
Water Backup or Sump Pump Overflow Included in policy contract By endorsement
Fraud Coverage $5,000 TBD

 

 

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