Why have National Flood Insurance, when FEMA is paying for everything?

Are they in fact providing “full benefits”?

Where’s your source, john?

I though FEMA funds top out at $25K for flood victims? But, that is just what I heard. Where did you get this info from?

I am not American, so i don’t know much about regulations and that, but can it be that FEMA is only paying when a flood is categorized as a National Disaster?
And thus, the National Flood Insurance comes in effect when it is a ‘normal’ disaster?

Souce: Yahoo News and an online source direct from FEMA. 50 million dollars total for 50,000 totally destroyed houses.

@rebbel That most likely is the case. The area must be declared a disaster by the federal government, the way I understand it. Good point.

Sooo… $1000 per home?

All that amount does is remind you how fucked you are.

Here are the requirements to be eligible for housing assistance with FEMA. It sounds to me like they don’t just hand out the money. So to me, it sounds like this is only to help people that didn’t have insurance or their insurance won’t cover the damage. Not having insurance in hopes that if there was a flood and it was declared a disaster by the President seems very risky to me.

@john65pennington Isn’t that $1K per house?

Davidson County, which Nashvile is Metro-included, was declared a Federal Disaster Area, along with most of the middle Tennessee area.

I fail to see how the question isn’t entirely misleading/outright false.

^_^ Don’t start on that with me.

I know I’m dyscalculic, but 50,000,000 / 50,000 = 1,000 any way you slice it.

I may be off by one zero. Someone please tell me if I am, my brain’s hurting trying to figure it out.

Either way, $1K or $10K isn’t enough to replace your entire life.

50 million was just the beginning amount, much more has been added. sorry, i should have read my email to its entirety.

@john65pennington But, what if someone gets flooded and it is not declared a disaster, just a back up in their drainage system after a big rain, and the water floods the house or something? The person needs their own insurance.

@Seek_Kolinahr You are correct, it is $1,000.

John, where in your mysterious e-mail source does it say they’re giving “full benefits”?

You know, like you wrote in the description of your question?

Also, why do I get the feeling that many of your questions on here are instigated by “e-mails” you get, and that the e-mails are all chain letters?

I am searching for that article and will display it as soon as i locate it. no mystery here. i receive daily emails from FEMA and updates on the Nashville flood situation.

Here is FEMA’s actual definition of their Disaster Assistance. They even say it is not meant to restore damaged property to it’s pre-disaster condition.

Really, not having insurance is a mistake. No one should rely solely on the hopes that they would be able to get FEMA to help them out.

It’s required around here if you live in a flood plain. You can’t sell a house without it. Most flooding doesn’t rise to disaster status; we tend to see it near small creeks and in low-lying areas, where just one or two houses might take on water after a heavy storm.

”It is meant to help you with critical expenses that cannot be covered in other ways. This assistance is not intended to restore your damaged property to its condition before the disaster.”

Sounds like you still need insurance to me.

By the way, something like 50% of flooding happens in “non-flood” areas. Flood insurance is cheap, everyone should have it. Everyone.

Here is the most up-to-date story I could find from FEMA about the costs involved so far with TN. They state that they have provided $117.8 million in housing assistance which covers rentals as well as repairs. They don’t mention how many people they have given housing assistance to, but they do say that 62,000 have registered with FEMA for assistance. If the benefits were equal for each person, that’s only $1,900 per person. They also state that they have give $17.7 million for other individual needs, such as personal property loss. If that is equal per person, that’s an addition $286 (rounding up). So that’s about $2,200 (rounding up again) per person that has registered for assistance. Definitely not enough to consider not having flood insurance in my book.

National Flood Insurance is counterproductive. It doesn’t adjust the premiums to reflect flood risk, so it ends up encouraging building in areas prone to flooding.

My own experience was that FEMA grossly overpaid for my damage. I was later told that the damage evaluators are rewarded for how much they hand out.

Flood insurance is cheap—yes. To the people who live in areas prone to flooding. That’s because the rest of the citizenry subsidizes that insurance. This encourages irresponsible building in flood-prone areas—like the Jersey sea shore. Or any coast of Florida, Mississippi, Lousiana or Texas.

If people had to pay the full cost of flood insurance on their own, with no government help, many fewer people would be living in flood areas. Few could afford it.

People living in flood areas get a great deal. First they get subsidized flood insurance, and then, if they get into a flood (and of course if they live in a flood area long enough, they will), they get more money from the government (i.e., all the citizenry) to help them out.

I don’t really mind helping out people in need. What I do mind is helping them move back into their houses over and over again after flood after flood. What will people think the next time New Orleans floods? Or a hurricane batters Florida three times in a week?

Do we really want to be paying for other people to live lives of folly in flood prone areas? Do we really want to drive up the costs for land in such beautiful areas so that the rich can live there and then, when their houses are destroyed, rebuild there—all at our cost? Hmmm?

@envidula61 I would have to see the actual stats to agree with you. Like I said 50% of floods happen in areas not expected to flood. Most of those people probably never paid a dime of flood insurance, and they will get the benefit. People in FL do pay, because they are required to most of the time if they have a mortgage. Most of the damage from the hurricanes is cause by wind damage in FL, or that has been my experience at least.

It’s been quite a few years since I looked at these data. In those days, it wasn’t quite so easy to get data from the Federal government. I can’t even remember the acronym—consolidated federal funds management accounts? I don’t remember. Anyway, you look at the amount taken in in premiums compared to the amount paid in benefits, and the books don’t balance. Far from it.

Of course, it’s complicated because they try to do these accounts by policy year (the year the policy was written), instead of looking at income and expense on a year by year basis. I don’t really understand how actuaries do their jobs, anyway. Which is sad, because my grandfather was one. An actuary, I mean. But I do remember figuring out that the insurance program had to be subsidized by tax dollars, because it wasn’t making it on its own.

@envidula61 I believe you when you say it is subsidized, I just was pointing out that the people really making out are probably the ones who don’t pay for flood insurance and get flooded in a disaster, not the people living by the water who pay in every year. Not that anyone is “making out” when they are damaged by a storm, for sure they are losing. And, I guess youa re saying that people are paying taxes for it even if they never need to use it.

I have always had flood insurance, always, whether required or not. I know more than one person near me in the recent storms, I am in Memphis, TN, who did not have flood insurance and had damage. I know everyone I have had a conversation with about insurance around me does not have flood insurance. My realtor actually told me she thought I was crazy to get it when I mentioned I had it. I think they are crazy. I also have earthquake insurance which is a fortune. My neighbor’s insurance stopped offering earthquake here a couple of years ago, he has decided to go without it.

@ItsAHabit, do you have any sources for FEMA “overpaying” damages?

Do you have any sources that show a correlation between this type of program and riskier building projects?

My source for the fact that FEMA grossly overpaid my damages is my personal experience. Here’s just one example of how it overpaid me: I had stored old furniture in my basement and was preparing to discard it. The FEMA evaluator never asked me anything about the old furniture but along with my big check was an itemized list that included specifically how much the agency (actually, how much taxpayers) was paying me for the worthless (supposedly water-damaged) furniture.

The fact that the low rates of the Federal Flood Insurance program promote building is widely known. When the agency charges a few hundred dollars for insurance that should cost thousands of dollars a year, people are encouraged to build in flood-prone areas. Of course, the taxpayer pays for the damage. In short, taxpayers are subsidizing the construction of luxury beach front houses and other buildings in high-risk areas..
http://www.ntu.org/news-and-issues/government-reform/ntu-testifies-on-the-national-flood-insurance.html

@envidula61

I’ll give you $1900 for your house, and everything that’s in it, straight up. Right now. You too, @ItsAHabit

@JLeslie Ah, the New Madrid fault. Well, Jane Bryant Quinn says you should get every kind of insurance you can. You have a lot of neighbors who are self-insuring, trusting that they won’t be living there for the 50 year or 100 year or 500 year flood, nor for the awakening of New Madrid.

I guess you can say that those who receive FEMA funds are “making out,” when they don’t have insurance, but they have paid for the program with tax dollars. FEMA is another insurance program—only run by the Feds, so the premiums are not separated out for us, and it looks like a free program. It’s not. It’s just insurance—only with a lot of people with low to no risk in the risk pool again subsidizing those who choose to live in disaster prone areas.

Interesting question, though: what is the appropriate definition of a risk pool—people in a designated flood area? People within a certain number of miles of a known fault in the tectonic plate? People within a certain number of miles of areas with past hurrican or tornado or thunderstorm damage?

Or does the risk all even out? I kinda figure that the Northeast is one of the safer areas, disaster-wise. The Northwest seems somewhat safe, although they have all those volcanos, if not earthquakes.

Interesting question—what are the safest parts of the world, disaster-wise?

@envidula61

You’ve pretty much named the entire country.

Look at a map. Seriously. Draw a big circle around every river, every coastline, every lake, everywhere it rains and the rain flows downhill, everywhere there’s a faultline, anywhere that’s fallen in the hurricane cone in the last 150 years…

You might not need flood insurance if you’re a Bedouin living in the Sahara.

@envidula61 Well, I know that flash flooding causes more deaths each year then any other natural disasters. Floods happen everywhere. True that the northeast is more immune compared to other parts of the country from the big scary thing slike earthquakes, tornados, and hurricanes, but they still do have flooding. Now, this info does not reall haave to do with mone though I guess, because we are talking propert damage not lives lost, and I do not know the average $ per year associated with each type of disaster, and I also do not know when they say $50million in damages from Hurricane whatever, how much is paid by private insurance and how much is spent by FEMA, state and federal govervment. It would be interesting to know how it breaks down with each disaster. Hurrican Andrew, Wilma, and I cannot remember the one that smacked the coastline closer to Melbourne several years ago, mostly hit insured people I would bet. Everyone I know who had damage in those storms, and I know a lot of people, needed windstorm not flood for the damage.

Also, hurricanes we have warning to secure things and protect ourselves. Tornados and flash floods you are just screwed, and typically there are more deaths. Many more deaths if you consider the amount of land a hurricane covers and compare it to the other disasters. Earthquake is a whole other thing.

Which brings us to New Madrid. If it ever does hit, we can be pretty sure it will be a doozy.

The director of government affairs for NTU testified about the National Flood Insurance Program before a Senate committee that “Rather than simply compensating homeowners for losses, the cheap insurance has actually encouraged more people to build in flood prone areas.”

“In the aftermath of the 2005 hurricane season, the program will be forced to borrow an astonishing $24 billion from the Treasury. It’s time to face facts: With premium payments yielding $2 billion per year and flooding likely to continue, even if not at the level we have seen in recent years, there is little likelihood of taxpayers ever recouping much of the $24 billion they are now owed.”

John Stossel earlier reported on his own experience with the Federal Flood Insurance Program. The NTU’s director of government affairs pointed out that “despite beach replenishment efforts by the Army Corps of Engineers (again taxpayer-financed) – his [John Stossel’s beach] house was washed completely away in a storm that he described as “fairly ordinary.” Of course, the NFIP paid for the house (the first $250,000 of which is insured under the federal program), and its contents (insured to $100,000), and there were only minimal restrictions prohibiting him from rebuilding on the same piece of land. Worse, he pays the same price for insurance the day after the storm as the day before. Quite simply, this is ridiculous policy. We have clear results that a location is at great risk for loss and yet we don’t restrict reconstruction and we charge the same rate. I can’t think of anyone who would run a business that way; no wonder we’re in the hole.”
http://www.ntu.org/news-and-issues/government-reform/ntu-testifies-on-the-national-flood-insurance.html

@ItsAHabit Maybe they should raise the premium a little bit? If I understand correctly John Stossel was paying for insurance.

Yes, they should raise it enough so that it pays for itself. Why should we taxpayers be subsidizing the construction of homes in flood prone areas? I think that the reason the premiums are kept ridiculously low is probably political. That’s the case with most federal programs; decisions are made on political rather than on appropriate criteria.

@ItsAHabit I don’t have a problem with the people who need insurance paying to self insure, but then people who are not insured seem to need help also, and that is going to be tax money I would guess? Or, do you suggest we do nothing through the government for people without insurance? And, really, I think everyone needs insurance for flood, and I would rather have it spread across taxable income then just the people who took the responsible action of buying insurance. I am not sure if I am being clear.

It might be both wise and fair to put a moratorium on insuring new buildings constructed in high risk areas but grandfather in those that have already been built. And obviously, if people choose to rebuild in such areas, they should not be able to buy National Flood Insurance that is subsidized by the taxpayers. And subsidized is hardly the right term if taxpayers have to pick up 85% or more of the tab.

@ItsAHabit Well, I disagree with the moratorium, but I understand why you feel that way, I have heard that before. I have to think about the second part. Places like New Orleans where the poor live in many numbers, would mean they are all relocated. I am not sure how I would solve it though.

I think we should dump the NFIP entirely and let people purchase insurance on the private market (God, I can’t believe I’m saying this). It is only then that people will see the real cost of living where they live. I do not believe I should have to pay for John Stossel’s house, but I do.

Many of the poor in New Orleans have been relocated. In fact, that’s mostly who left and didn’t come back. What’s worse, is that noble-minded people are going down there to help New Orleanians rebuild with free labor. They will be washed out again. All that work for nothing.

But whatever. This country likes to keep shooting itself in the foot. Everyone is hueing and crying over BP’s oil spill, but it was us who allowed them to drill there without appropriate safety systems.

Sigh. Nothing ever seems to change.

Anyone rebuilding in New Orleans who gets National Flood Insurance should have to build in such a way that they are no longer in danger of flooding. For example, many houses at beaches are built on piling and they keep their car beneath the house. That could be a solution in New Orleans.

@ItsAHabit Some houses have been built on stilts in the area. I saw it on some show, I think it was Oprah. I wonder how much more it costs to build that way?

I don’t know the cost but it’s a case of pay some now or a lot more later. We taxpayers shouldn’t have to pay damages for re-built houses not properly protected from flood damage.