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Does anyone have any experience with purchasing flood insurance from the private market?  It seems to be a fairly small market.  Looking for reputable companies and pricing.

Thanks

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I'm not sure why they didn't force him to raise it? Maybe it was never considered totaled.

TravelerMSY (Sep. 15, 2017 @ 1:46p) |

That surprises me too!!

It does not have to be totaled!!

FEMA guidelines effectively force you to raise the house (in lega... (more)

puddonhead (Sep. 15, 2017 @ 2:32p) |

The maps at the time could understand the true risk. Maybe he's compliant but in a spot that floods anyway.

Even one loss... (more)

TravelerMSY (Sep. 15, 2017 @ 5:12p) |

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Depends on State, it should be regulated.  And if you are in Florida, you are a bit late

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How about Texas?

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qcumber98 said:   How about Texas?
  Perfect!  They won't cover Harvey though.

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As far as i know, all insurers use the federal program because its so unprofitable. Theres a 30 day waiting period.

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The private insurers just put their "wrapper" on the policy - everything is reinsured by Natl Flood. And all carriers have a mandatory 30 day wait period.

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busnut said:   The private insurers just put their "wrapper" on the policy - everything is reinsured by Natl Flood. And all carriers have a mandatory 30 day wait period.
  This is correct. No matter what agent you buy your flood insurance through it all goes through FEMA's national flood insurance program.

https://www.fema.gov/national-flood-insurance-program

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forbin4040 said:   
qcumber98 said:   How about Texas?
  Perfect!  They won't cover Harvey though.

According to the health insurance debate, denying coverage for preexisting flood damage is ridiculous and unfair.  

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Glitch99 said:   
forbin4040 said:   
qcumber98 said:   How about Texas?
  Perfect!  They won't cover Harvey though.

According to the health insurance debate, denying coverage for preexisting flood damage is ridiculous and unfair.  

  you can control where you move to and buy a house. Everyone who lives near the coast of TX and FL knows they are at significant risk of hurricanes

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prosperity said:   
busnut said:   The private insurers just put their "wrapper" on the policy - everything is reinsured by Natl Flood. And all carriers have a mandatory 30 day wait period.
  This is correct. No matter what agent you buy your flood insurance through it all goes through FEMA's national flood insurance program.

https://www.fema.gov/national-flood-insurance-program

  WRONG.  While it is true that NFIP policies are sold by various agents/companies, the NFIP is NOT private flood insurance, which is allowed in some states.
See:  https://www.nytimes.com/2016/09/08/your-money/how-to-assess-priv...
Also:  http://morrisandreynolds.com/13806-2/
Also:  http://www.lexingtoninsurance.com/insights-innovations/current-p...  

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Yes, you can buy private or non nfip flood insurance.

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http://www.privatemarketflood.com/

This is underwritten by lloyds of london. It's the only alternative to FEMA as far as I know.

FEMA is known to under-price highly risky properties, and overprice the low risk ones. Lloyds of london pick up the low-risk properties.

There will be middlemen between you and lloyds of london. So it is useful to get quotes from multiple different agents even though they will all go to the same underwriter.

In my case, private market flood is about 40% cheaper than FEMA assuming I pre-pay 3 years in advance!!

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Agents sell it. It's expensive if you live anywhere where you'll actually need it.

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TravelerMSY said:    It's expensive if you live anywhere where you'll actually need it.
  doesn't that mean they're pricing in the risk? The whole point of insurance is that its relatively cheap only for extremely unlikely events (life ins)

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puddonhead said:   http://www.privatemarketflood.com/ 

This is underwritten by lloyds of london. It's the only alternative to FEMA as far as I know.

  Not the only alternative.  See below for some other companies offering PFI.  Ultimately, probably all of the PFI is re-insured through Lloyds or similar syndicates.
http://www.assurantfloodsolutions.com/
http://www.nfsedgeinsurance.com/Pages/Home.aspx
https://www.typtap.com/
 

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rufflesinc said:   
TravelerMSY said:    It's expensive if you live anywhere where you'll actually need it.
  doesn't that mean they're pricing in the risk? The whole point of insurance is that its relatively cheap only for extremely unlikely events (life ins)

  Yes, Excess flood (only from private insurers) is fairly priced. FEMA flood is underpriced but has relatively low limits.

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At the end of the day, all private market flood companies are in it to make money (unlike FEMA) - which is a good thing!

All flood insurance is likely to pay only for structural damage. If you need "contents" coverage, that adds to the premium significantly, AND has pretty adverse rules of what can be reimbursed and how much. Considering all these - for my house - it makes a lot of financial sense to self-insure assuming you did not consider the cost of funding into your calculatiion.

As of now I am about ~$200k in-debt for my house. For reference - I come from a culture where you save up your whole life and THEN you buy a house. Going into debt - i.e. mortgage to buy a house, raised a lot of eyebrows among my friends and relatives - especially as I am considered someone who is "successful". Anyway, once the house is paid off (which should be < 10 years or less from how based on how I am paying down the balance every month), AND I am able to bank ~$250k as the "self-insured" rebuilding cost - the floord insurance rates will make it worth it for me to self insure!!

I hope to see a day where the gub'mint (i.e. FEMA) gets out of the way and lets the property owners handle the property damage. As long as human lives are not involved - property damage and any insurance for it should only be the property owner's problem, and nobody else's.

<edited to add> In my specific situation, where I can't quite afford to do BOTH - i.e. pay off AND self insure. In a similar scenario -  the private market flood may make sense. </edited to add>

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Glitch99 said:   
forbin4040 said:   
qcumber98 said:   How about Texas?
  Perfect!  They won't cover Harvey though.

According to the health insurance debate, denying coverage for preexisting flood damage is ridiculous and unfair.  

  Never said they would 'deny' coverage.  I said they wouldn't cover Harvey.  (Which went 2 weeks ago) Buying insurance and expecting them to pay for pre existing issues (Such as not having much of a house left) is probably going into Fraud territory.  That's also why they do an appraisal of the home (or foundation ) and give you a value based on it.

Now if you are buying insurance for Irma and you paid today, wow you are SET. 100% coverage.

Health insurance pre existing coverage is another story, you are alive and 'healthy', but that little pre existing might kill you in 6 months.  That's why there is a such a big argument.  Now if the person bought flood insurance AFTER Harvey and Irma destroy's his home...again...then he's covered.  If you buy health insurance but your preexisting is going to kill you in 6 months, do you think they want to cover that person?

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Not so sure. (Federal) Flood usually has a 30 day waiting period to keep you from gaming it, Read the fine print.

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puddonhead said:   At the end of the day, all private market flood companies are in it to make money (unlike FEMA) - which is a good thing!

All flood insurance is likely to pay only for structural damage. If you need "contents" coverage, that adds to the premium significantly, AND has pretty adverse rules of what can be reimbursed and how much. Considering all these - for my house - it makes a lot of financial sense to self-insure assuming you did not consider the cost of funding into your calculatiion.

As of now I am about ~$200k in-debt for my house. For reference - I come from a culture where you save up your whole life and THEN you buy a house. Going into debt - i.e. mortgage to buy a house, raised a lot of eyebrows among my friends and relatives - especially as I am considered someone who is "successful". Anyway, once the house is paid off (which should be < 10 years or less from how based on how I am paying down the balance every month), AND I am able to bank ~$250k as the "self-insured" rebuilding cost - the floord insurance rates will make it worth it for me to self insure!!

I hope to see a day where the gub'mint (i.e. FEMA) gets out of the way and lets the property owners handle the property damage. As long as human lives are not involved - property damage and any insurance for it should only be the property owner's problem, and nobody else's.

<edited to add> In my specific situation, where I can't quite afford to do BOTH - i.e. pay off AND self insure. In a similar scenario -  the private market flood may make sense. </edited to add>

  The problem with that approach is that most property owners simply can't handle the expense. Most people don't even have $5k in their retirement account, never mind $250k to rebuild.
You end up with a city full of half-demolished, rotting structures, and a bunch of bankrupt homeless people. Not great for the economy. Guess who would have to pick up the tab to make the city habitable again? The taxpayer.
If you choose to live in a flood zone, you have a responsibility to society to have the funds available to clean up your property. Just like car insurance, and also health insurance. You can't just freeload off the people living inland, and dump your risk on them.
The coming FEMA bill for Harvey and Irma will be bad enough for taxpayers.

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forbin4040 said:   
Glitch99 said:   
forbin4040 said:   
qcumber98 said:   How about Texas?
  Perfect!  They won't cover Harvey though.

According to the health insurance debate, denying coverage for preexisting flood damage is ridiculous and unfair.  

  Never said they would 'deny' coverage.  I said they wouldn't cover Harvey.  (Which went 2 weeks ago) Buying insurance and expecting them to pay for pre existing issues (Such as not having much of a house left) is probably going into Fraud territory.  That's also why they do an appraisal of the home (or foundation ) and give you a value based on it.

Now if you are buying insurance for Irma and you paid today, wow you are SET. 100% coverage.

Health insurance pre existing coverage is another story, you are alive and 'healthy', but that little pre existing might kill you in 6 months.  That's why there is a such a big argument.  Now if the person bought flood insurance AFTER Harvey and Irma destroy's his home...again...then he's covered.  If you buy health insurance but your preexisting is going to kill you in 6 months, do you think they want to cover that person?

  Which is where the individual mandate comes in. It prevents people from gaming the system by signing up for health insurance only after they develop a condition. Insurance works by spreading the risk, so healthy people have to pay in as well.
Flood insurance works the same way, which is why there's a mandate to buy it, and a 30-day wait before activation (ie similar to annual enrollment for health insurance).

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In parts of Florida it's mandated, but not in Texas

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>> Now if you are buying insurance for Irma and you paid today, wow you are SET. 100% coverage.

I don't exactly know how the FEMA insurance works - but the private market flood I mentioned above will not "approve" your insurance application right now. They place moratoriums before these big storms.

Even if you theoretically pay for the (FEMA) insurance today - I don't think they will pay for any IRMA damage. There is a waiting period which will exclude damages from foreseeable events.

>> If you choose to live in a flood zone, you have a responsibility to society to have the funds available to clean up your property. Just like car insurance, and also health insurance. You can't just freeload off the people living inland, and dump your risk on them.

Car insurance is necessary as I can cause damage to other's property directly.
Health insurance is necessary as I can choose to freeload via the ER.

Why is flood insurance a necessity?

As a property owner (presumably neighbor of the guy in the flood zone) - you should be exposed to market risk. If the houses in the flood zone get damaged and boarded up - well that is just another market event!!

Note: I am not arguing for going naked on flood insurance. I am against mandating it. Lender's have a right to mandate whatever they want for loaning money. That way, the "mandate" is there as long as you have a mortgage. But any mandate beyond that will likely get into unconstitutional territory.

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If you are not in a flood zone and have not been flooded previously, it doesn't make any sense to buy flood insurance. Premiums are too high for responsible behavior and you are essentially subsidizing folks who live in the flood plain or have ocean front properties. Instead, much better to self insure.
I know friends who live in Houston flood plain and their house has been flooded 3 times in the past 3 years. It's a money maker for them through NFIP !

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puddonhead said:   >> Now if you are buying insurance for Irma and you paid today, wow you are SET. 100% coverage.

I don't exactly know how the FEMA insurance works - but the private market flood I mentioned above will not "approve" your insurance application right now. They place moratoriums before these big storms.

Even if you theoretically pay for the (FEMA) insurance today - I don't think they will pay for any IRMA damage. There is a waiting period which will exclude damages from foreseeable events.

>> If you choose to live in a flood zone, you have a responsibility to society to have the funds available to clean up your property. Just like car insurance, and also health insurance. You can't just freeload off the people living inland, and dump your risk on them.

Car insurance is necessary as I can cause damage to other's property directly.
Health insurance is necessary as I can choose to freeload via the ER.

Why is flood insurance a necessity?

As a property owner (presumably neighbor of the guy in the flood zone) - you should be exposed to market risk. If the houses in the flood zone get damaged and boarded up - well that is just another market event!!

Note: I am not arguing for going naked on flood insurance. I am against mandating it. Lender's have a right to mandate whatever they want for loaning money. That way, the "mandate" is there as long as you have a mortgage. But any mandate beyond that will likely get into unconstitutional territory.

Rotting, destroyed houses are not a market event, they're an event that hurts everyone living in that area. They kill the town. Imagine if your house was surrounded by them at this moment? The value of real estate in the area would drop dramatically. Your neighborhood would rapidly become a slum. Stores would leave. It would be like Detroit, or the flooded-out areas of New Orleans. You have a responsibility to society not to let your property fall apart to the point where it impacts other people's lives. Unfortunately, a mandate is the only way to ensure that people live up to that responsibility, and don't freeload off the taxpayer to rebuild.

I certainly would not want to live in an area without such a mandate. One good storm, and the value of your property goes to zero for a long time, even if you personally have the funds to rebuild.

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Contrary to mistaken statements above, there is NO universal "mandate" to buy ANY amount/kind of flood insurance, REGARDLESS of where you live.  Mortgage holders, of course, may impose such a requirement, but debt-free folks can do what they want, e.g., self-insure.

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tuphat said:   Contrary to mistaken statements above, there is NO universal "mandate" to buy ANY amount/kind of flood insurance, REGARDLESS of where you live.  Mortgage holders, of course, may impose such a requirement, but debt-free folks can do what they want, e.g., self-insure.
  Mortgage Holders MUST impose this requirement for high risk zones. It's a federal mandate.
It's also a requirement that you purchase flood insurance for as long as you own the building, if you've ever received any federal disaster assistance (grant or loan). If you don't then good luck getting any federal disaster aid in the future.

However, unfortunately, as you pointed out, debt-free folks can self-insure. Luckily, there aren't that many of those unless you live in a high-end neighborhood.
I can't think of a quicker way to kill a middle-class neighborhood than to have a bunch of people walk away from destroyed homes and leave them to rot. It's the opposite of the virtuous cycle of gentrification. The more people who walk away, the lower property values fall. Even the ones who have the means to rebuild will then walk away because it no longer makes financial sense to build due to low property values. As the place turns into a half-empty, crime-ridden slum with huge property taxes (like parts of Detroit), everyone walks away and lets the banks foreclose on what's left.

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I wonder how many people who 'self insured' in Florida and Texas are regretting that decision now.

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forbin4040 said:   I wonder how many people who 'self insured' in Florida and Texas are regretting that decision now.
  A fair number, but maybe fewer than you'd think.  Say an elderly couple was planning on leaving $X00k in cash/securities to kids/grandkids, but they also viewed the potential bequest as a contingency fund for their own re-building, etc.  They come out even, with kids & grandkids effectively bearing the cost of rebuilding.

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Two issues not mentioned in this thread so far (at least not that I saw):

The FEMA/NFIP flood insurance maximum is 250k structure/100k contents. There are plenty of homes in Houston that sustained more damage than that even if they had insurance.  This is where the private market might come in -- insuring above that level.  BTW its $250 for 100k/50k and $450 for 250k/100k (yearly) for preferred risk properties.  No brainer if you ask me.

80% of the homeowners flooded in Harvey didn't have flood insurance.

Why?
Because they weren't in a 100 year floodplain -- and mortgage lenders did not require it. Just like someone else said, most don't have 5k in their retirement account and certainly don't have $450 to come out of pocket yearly.  Not required = Not escrowed (in most cases).

May be lots of foreclosures coming.

Fortunately FEMA disaster relief is picking up the tab for those that were irresponsible to the tune of $30k+ in some cases.
If you had flood insurance, you get nothing from FEMA.  If you were irresponsible and didn't have it -- they open up the checkbook for you.

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South Louisiana for Katrina eventually had a 150k/home state/federal bailout. "The Road Home" Just of excess uninsured losses.

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I think ignorant is probably more apt than irresponsible. Most people who aren't next to a body of water would think they're safe if their mortgage company didn't require flood insurance.

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jedblanks said:   
May be lots of foreclosures coming.

Fortunately FEMA disaster relief is picking up the tab for those that were irresponsible to the tune of $30k+ in some cases.
If you had flood insurance, you get nothing from FEMA.  If you were irresponsible and didn't have it -- they open up the checkbook for you.

  1) Avg FEMA Payout for Superstorm Sandy was 8k.
2) You have to repay FEMA, it's a loan, not a hand out.
3) I think having your own insurance is much better than having a FEMA hand out.

http://www.theadvocate.com/louisiana_flood_2016/article_22c86fe0...

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forbin4040 said:   I wonder how many people who 'self insured' in Florida and Texas are regretting that decision now.
  6 million people live in the greater Houston area. About 40k homes were damaged in the Houston area. Many of those are not completely destroyed. The vast majority of people would not have benefited from flood insurance.

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gnopgnip said:   
forbin4040 said:   I wonder how many people who 'self insured' in Florida and Texas are regretting that decision now.
  6 million people live in the greater Houston area. About 40k homes were damaged in the Houston area. Many of those are not completely destroyed. The vast majority of people would not have benefited from flood insurance.

  it's 2 Million in Houston alone.
And yes it's 40k homes destroyed, not damaged. (In Houston)

Lets just assume all 2 million have some kind of water damaged house.  Unless you were one of the lucky ones who live on a mountain that resists flooding.

But as I said, how many self insured people are not going to have a place to live.  And 8k MIGHT buy a Mobile Home....but not to rebuild a house that has water damage.

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As I previously posted in another thread, 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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Deleted my original post.

The updated quote I'm getting from Private Flood is @ 5x what I'm paying now.

I think I'll stay with the National Flood Ins Plan for now.

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This is why NFIP is going broke.  From W5J --

Brian Harmon had just finished spending over $300,000 to fix his home in Kingwood, Texas, when Hurricane Harvey sent floodwaters “completely over the roof.”

The six-bedroom house, which has an indoor swimming pool, sits along the San Jacinto River. It has flooded 22 times since 1979, making it one of the most flood-damaged properties in the country.

Between 1979 and 2015, government records show the federal flood insurance program paid out more than $1.8 million to rebuild the house—a property that Mr. Harmon figured was worth $600,000 to $800,000 before Harvey hit late last month.

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I'm not sure why they didn't force him to raise it? Maybe it was never considered totaled.

Skipping 2 Messages...
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The maps at the time could understand the true risk. Maybe he's compliant but in a spot that floods anyway.

Even one loss, even a 100% insured one, would make me want to move. Too emotionally draining, I can't imagine 10 or more.

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