Insurance Quotes & Advice

The facts are that flood damage can happen no matter what state you live in.  Even in the highest risk areas, only a small percentage of homeowners purchase flood coverage.  Many Americans have left themselves wide open to heavy losses with little to no recourse.

It’s estimated that about 30% of Americans still mistakenly believe that flooding is covered under their regular homeowner’s policy.  Heavy rains in the Midwest have brought flood insurance back into the spotlight.

Since insurance companies don’t typically offer this kind of coverage the government has had to step in and become the “insurer of last resort”.  In 1968, Congress established the National Flood Insurance Program(NFIP) which is under the direction of the Federal Emergency Management Agency(FEMA).

The program offers flood coverage to residents in communities that follow FEMA guidelines for floodplain management and damage mitigation.  Annual premiums are normally in the $400-$500 range for a median priced home.  While regular insurance carriers don’t offer the coverage itself many of them have entered into agreements with the program to accept payments for the flood coverage and maybe able to offer you some advice.

The program is often criticized because it encourages people to build and reside in flood prone areas.  Nonetheless if you live in these areas currently, you should take advantage of it.

Since it’s a federal run program, premiums are artificially low.  If private companies were to offer flood insurance, rates would be much higher.

Last week the Florida Insurance Regulatory Commission suspended Allstate’s right to write new polices in the state.  The reason given for Allstate’s suspension was their failure to comply with subpoenas issued by the state’s insurance office back in October.

The Florida First District Court of Appeal’s however granted a stay on the suspension earlier today.  Florida Gov. Charlie Crist was critical of the court’s decision, releasing this statement.

“For too long, insurance companies have ignored the needs of their customers and unfairly taken advantage of Florida homeowners.  I am disappointed by the recent action by the First District Court of Appeal to stay Allstate’s suspension. I urge Commissioner McCarty to act as early as Tuesday to show why the order suspending Allstate’s license should remain in effect.”

Florida’ government has been involved in an ongoing dispute with the insurance industry concerning rates in the state, some of the highest in the country.  The battle has become increasingly bitter in recent months as many companies sought to raise rates after a very quiet hurricane season.

It has reached the point where the governor has been looking into initiating a class action lawsuit against the insurance industry.

In welcome news to Florida homeowners, state regulators denied Allstate Insurance in their bid to raise property insurance rates by as much as 43% statewide. 

When the company filed for the rate hike October 1, Florida Gov. Charlie Crist was very critical of the company citing legislation the state passed earlier in the year to increased it’s Hurricane Catastrophe Fund by $12 Billion.  The fund gives insurance companies a cheaper reinsurance option and was expected to save the industry millions in the state.

While Allstate did lower rates earlier this year by 14%, regulators felt the company didn’t pass on enough savings to customers which was a prime reason for denying this rate increase.  The company’s stated that the reason for the increase was that it’s assets were not sufficient to meet all their claims in a worst case scenario.

It will be interesting to see what Allstate’s next move will be.  They do have the option of filing a petition for a hearing before the state’s Division of Administrative Hearings.

In the past, Allstate hasn’t been shy about leaving states that the company felt presented an unwarranted risk to it’s overall business plan.  Earlier this year the company announced it was leaving the property insurance market in California due to the high risk of wildfires in the state.

In a side note some industry analysts predicted insurance rates for all fields will either decline or remain flat for 2008.