If it isn’t raining why do I need flood insurance?

By Kate Neiswenderflood.house_

A few days ago in the newspaper, advice there was a letter from a gentleman who complained that it wasn’t raining, thumb so he shouldn’t have to pay for flood insurance.  The lack of logic in this comment was somewhat appalling.  Using the same logic, patient because I don’t have a fire at my house every year, I should not pay for fire insurance.  I am willing to discuss “hit by a meteor” insurance or even “struck by lightning” insurance, but here in California, water falls from the sky eventually.  When the rain does come, it falls in buckets, in gully-washers, in drenching storms that last for a few short days and cause massive amounts of damage.  We live with this.

Apparently, the letter-writing gentleman was unhappy that FEMA had changed the rules.  First, he was out of the flood plain (no insurance needed) then he was back in.  That was what prompted his letter.  His letter made me start thinking too – why is it that so many Americans look to the government to bail them out when things go wrong, while at the same time cursing the government for having programs designed to bail them out?

The National Flood Insurance Program was created because normal insurance companies refused to cover homes and businesses in flood plains.  That’s what insurance companies do: they manage risk.  And the risk of insuring damage to a home in a flood plain was too high.  Unfortunately, instead of creating a law that would have refused building permits to anyone in a flood plain and phasing out existing structures over time, the federal government swooped in to protect property rights.  The National Flood Insurance Program – funded by the tax dollars of all Americans – subsidized those hardy individuals who wanted to build in foolish, catastrophe-prone locations.  The logic was that the government would act as an insurer, and that the catastrophe-prone would pay their insurance premiums.  Win-win.

However, according to recent FEMA reports, the National Flood Insurance Program is $24 billion in the red after Hurricane Katrina and Superstorm Sandy, and such storms are said to be the “new normal” by the National Oceanic and Atmospheric Administration (NOAA).  Congress has a bill circulating to raise the rates for flood insurance, but the public (at least those who have property in the flood zones) is howling.  FEMA is working on a study, but it’s not finished, so another bill is trying to delay any premium increases until after the study is complete.  Study or no study, there is clear evidence that the flood insurance premiums do not cover flood damage.  If this were a free market insurer, premiums would have sky-rocketed years ago . . .  But wait!  There is no free market insurance for those areas, because free-market insurance companies pulled out of that market.  The private insurers manage their risk.

So how could someone claim that because it isn’t raining, there is no need for flood insurance?  Maybe because that same person does not manage their risk in a rational way.  We should not be constructing buildings or other structures in a flood plain.  People in fire-prone areas should not be surprised when California wildfires consume their homes.  People who live on hillsides should be aware of mudslides and land movement.  I am not saying “don’t build” in these areas, but I do think that if you choose to build, don’t look to the government to bail you out.  That is especially true for people who say “it’s not raining, therefore I don’t need flood insurance.”

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Kate Neiswender is a local land use/CEQA attorney and writer, who does not currently live on a flood plain.

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