Friday, June 20, 2008

Four Hundred Dollars A Year

More Homeowner Stupidity...

Suppose that, having negotiated the purchase agreement, successfully closed the mortgage, and moved your wife, your kids, your dog, your ferret, and all of your worldly possessions into a concrete, wood, and steel box you call home, you found out that for an additional four hundred dollars a year you could close the only sizable loophole in your homeowners' insurance package--and you didn't do it.

Then, in the spring and early summer, like the "homeowners" in this news story, you watched the Mississippi river overflow across the local Levee and through that insurance loophole into your front yard and living room taking a lifetime of possessions and memories with it downstream.

Wouldn't you say that anyone that found themselves in that situation to have a bad case of "pound wise and penny foolish" disease?

Here's the meat of the story:

GULFPORT, Ill. (AP) - Juli Parks didn't worry when water began creeping up the levee that shields this town of about 750 from the Mississippi River - not even when volunteers began piling on sandbags.

After all, local officials had assured townspeople in 1999 that the levee was sturdy enough to withstand a historic flood, and FEMA had agreed. In fact, some relieved homeowners dropped their flood insurance, and others applied for permits to build new houses and businesses.

Then on Tuesday, the worst happened: The levee burst and Gulfport was submerged in 10 feet of water. Only 28 property owners were insured against the damage.

"They all told us, 'The levees are good. You can go ahead and build,'" said Parks, who did not buy flood coverage because her bank no longer required it. "We had so much confidence in those levees."

I did a little Googling, and the town of Gulfport, IL has a population of only 222 (something that would have been interesting to add to the news story written by so-called "professional journalists"), and assuming a household size of between 3 and 4 people, there should only be somewhere between 56 and 74 houses in the "village."

That means that somewhere between 1/2 and 1/3 of the "homeowners" were responsible enough to take the protection of their largest investment into their own hands and buy flood insurance.

That also means that somewhere between 1/2 and 2/3's of the "home borrowers" decided to rely on the GOVERNMENT to protect them.

And the levy...another government entity.

Let me say THIS about THAT (evoking my inner Sam Kennison) live IN a FLOOD the LARGEST river in the COUNTRY...


the SAME riVVVVVeeeRRRRRR that floods somewhere almost EVERY YearRRRRRR.

Remember 1993?

Were you alive in 1993...or just on drugs?

You must have been alive unless you have somehow bought a house when you are 15 years old. can people be so stupid?

We bought flood insurance on everything we had when we lived on our little island on the Georgia coast, even though the property in Brunswick didn't specifically require flood insurance.

Funny thing, but when I saw old black & white pictures of downtown Brunswick submerged under 20 feet of water during the 1893 hurricane, I decided that $400 was cheep when I considered the option of losing a building I paid CASH for.

I didn't need the GOVERNMENT or a bank or Mortgage Company to tell me I needed flood insurance--it's ridiculously inexpensive considering the risk, and the GOVERNMENT helps finance it.



I had a comment saying that my $400 figure was low, and they are probably correct because of the location and value of my property on the georgia coast.

The cost of flood insurance does vary by location, frequency of past flooding, and the value of your house, but that is something that I say people should consider when and if they elect to live in a flood hazard area.

I priced homeowners insurance for an ocean front parcel in 2002 on the Gulf coast of Florida--land and building worth about $500K, and it was over $13,000 per year for full coverage--half being flood and 1/3 being windstorm coverage.

Even if I could have pulled off buying the property and building the house, I couldn't have justified (or paid for for that matter) the cost of the insurance on an annual basis.

I know that things like Dams and Levee's breaking are extreme circumstances, but you also assume the risk when you live in the shadow of a manmade structure or on the shore of the ocean or on the banks of a river.

I don't mean to really appear heartless, but it just pisses me off when these news stories place the blame on FEMA and lament lack of government action rather than pointing out that people make the decision to place their lives and their property at risk and refuse to bear the true financial burden of their decisions.

I really don't think that the government needs to be in the Flood insurance business in the first place because I don't see it anywhere in the US Constitution and all it's done is encourage middle America to populate areas where the risks are just too large.

If you had to pay cash to live on the ocean or the Mississippi because the banks wouldn't loan you money, the value of ocean front and river front property wouldn't be so high and fewer people would be threatened, injured, and killed each year.

Talk about unintended consequences...

1 comment:

old pipe smoker said...

Flood insurance for $400.00? Jan. 1,2008 we are now in a flood plane, insurance $2100.00.