FBBC: A New Plea for Help

insurance = scam
(mostly)
Or as Nassim Taleb might say, you attempt to protect yourself from Black Swan (unpredictable, damaging) effects with cost of dramatically increasing fragility.

Generally:

• If the flood comes from “up” (say a broken pipe, overflowing toilet, hole in roof), regular property insurance covers it
• If the flood comes from “down” (as in rising waters), one needs special flood insurance

Why I researched it: I am down slope from some residential lots. Down slope of me is a large storm water drain. Heavy rains flood my backyard. My lower level (a “walkout” level) has never had water encroachment (we are drain tiled w a sump pump) and the flood typically dissipates in a day. But my neighbor’s lower level (he’s about 3 feet lower than me), has flooded.

[Andrew K]

insurance = scam

(mostly)

Or as Nassim Taleb might say, you attempt to protect yourself from Black Swan (unpredictable, damaging) effects with cost of dramatically increasing fragility.

I’m currently involved with a large insurance claim at my job.

Lesson Learned # 1: Insurance companies are not your friends.

You just have to know what you’re covered for. It’s not all like that scene from The Incredibles. Any good realtor will tell you what Jim noted; if you’re in a likely flood plain, you need to consider getting flood insurance.

Another thought; if you’re building, consider retaining the fill dirt from digging your foundation and build your house a few feet above what was the grade level to reduce the likelihood of flooding. The house I grew up in in NW Indiana was built up a bit this way, and suffice it to say that it reduced the work of the sump pump quite a bit.

About 10 years ago we had a severe hail storm hit the house. Damage:

• Roof
• Siding on two sides
• Windows on two sides

All had to be replaced. Our insurance company at the time was Allstate. They were super. I think the damage was nearly $ 70,000.

Not denying that it can’t work out great for individuals, but I still consider it a net loss, in most cases—on the social and policy level.
What we should be working on, to my mind, is not insurance for everyone to make sure no one is ever financially ruined; we should be working on ameliorating what Scott Alexander calls “cost-disease.” I.e., the largely inexplicable and severe rise in prices and services which make insurance a virtual necessity in the modern, developed world.

Insurance may or may not be required.

• I don’t have life insurance, for example. My kids are grown up and my wife is well-prepared
• We don’t have flood insurance. I’m guessing that a 10” rainfall would flood my lower level and cost me a bunch. I deem the likelihood of that to be small
• I am not required to have homeowner’s insurance since my home is paid off
• I am required by state law to have auto insurance and so I do
• We have a Medicare advantage plan because - yikes!!! - healthcare costs can be very expensive (I think my radiation treatments were about $ 50K)

I would say that for Faith, its very prudent to have insurance - although they could not have anticipated the amount of rain that caused the flooding.

Insurance is not a scam. Read your policy. Make use of a good agent who can explain in detail what you are covered for, and what is not covered. It is no fault of the insurance company if you, out of ignorance, do not acquire the needed coverage.

[LGCarpenter]

Insurance is not a scam. Read your policy. Make use of a good agent who can explain in detail what you are covered for, and what is not covered. It is no fault of the insurance company if you, out of ignorance, do not acquire the needed coverage.

[Jim]

Insurance may or may not be required.

• I don’t have life insurance, for example. My kids are grown up and my wife is well-prepared
• We don’t have flood insurance. I’m guessing that a 10” rainfall would flood my lower level and cost me a bunch. I deem the likelihood of that to be small
• I am not required to have homeowner’s insurance since my home is paid off
• I am required by state law to have auto insurance and so I do
• We have a Medicare advantage plan because - yikes!!! - healthcare costs can be very expensive (I think my radiation treatments were about $ 50K)

I would say that for Faith, its very prudent to have insurance - although they could not have anticipated the amount of rain that caused the flooding.

It’s really pretty simple. Any good realtor can get you quotes for flood insurance—it may be required in many areas—and you can weigh the cost and the likelihood of flooding versus the likely cost of repairs and your ability to weather that storm. In this case, given that huge floods in Ankeny are not that common (I can’t even find out whether they flooded much in the big year of 1993), my take is that they made the right decision. If indeed their costs for repairing 9 buildings are only $150k, they are on the right side of the cost equation here.

[Bert Perry]

It’s really pretty simple. Any good realtor can get you quotes for flood insurance—it may be required in many areas—and you can weigh the cost and the likelihood of flooding versus the likely cost of repairs and your ability to weather that storm. In this case, given that huge floods in Ankeny are not that common (I can’t even find out whether they flooded much in the big year of 1993), my take is that they made the right decision. If indeed their costs for repairing 9 buildings are only $150k, they are on the right side of the cost equation here.

https://www.wsj.com/articles/american-homeowners-still-have-a-big-under…

Many U.S. homeowners are inadequately insured for natural-catastrophe damage ahead of the height of the Atlantic hurricane season.

Three major landfalling hurricanes in 2017—Harvey, Irma and Maria—revealed a widespread lack of full insurance coverage for homeowners in Texas, Florida, Puerto Rico and elsewhere. Those storms served as a wake-up call to some, but the underinsurance of Americans persists, according to regulators, trade groups and government data.

While most people have home insurance, many lack flood insurance, which is typically purchased from the U.S. government as a separate policy. Many homeowners also have home-insurance policy limits that are too low to cover the full cost of repairing or rebuilding their properties.

“Many people thought that they had a fully insured home or fully insured business” before last year’s catastrophes, said Iraelia Pernas, executive director of Acodese, an industry group for insurers in Puerto Rico. “They discovered that there were some exclusions in their policies.”

….

Hurricanes weren’t the only disaster that exposed issues last year.

Following devastating wildfires in Northern California in October, about two-thirds of the victims said their insurance wouldn’t fully cover the cost of repairing or replacing their dwellings, according to a survey by consumer-advocacy group United Policyholders.

Laney Wall and Scott Rooks ’ house in Santa Rosa, Calif., burned down. They are living in a rental house, which is currently paid for by insurance, but their home policy won’t cover the full cost of rebuilding, they said.

“What will we do when we run out of money?” said Mr. Rooks, a pilot. “There’s massive amounts of stress knowing that if we were insured for the proper amount, it would be no big deal.”

Jim’s comment reminds me of homeowners in the mountains near Boulder who never bothered to clear brush from around their homes, and were then horrified to learn that it was not always possible to save their homes when periodic wildfires followed the trail of kindling right to the front door. They also used to love their cedar shake roofs and cedar siding, which of course continued that path of kindling right into the house. I wonder how many of the homes lost in Northern California had owners who understood this principle.

Really, only two major ways of mitigating cost disease. Either you can ban idiot behaviors, or you can let people incur the costs of their decisions. Faith has done part of this by working with supporters to use sweat equity instead of insurance equity, and I commend them for that.