State-sponsored high-risk insurance pools from Texas to North Carolina have taken on more than $345 billion in hurricane damage exposure, says Rep. Gene Taylor, D-Miss. He sponsored a bill that would expand the National Flood Insurance Program to include coverage for windstorms.
“There is no functioning, competitive market for property insurance in coastal areas. Millions of homeowners and business owners are required by their mortgages or lenders to buy windstorm coverage, but private insurance companies are not required to sell it to them. Since Hurricane Katrina, insurance companies have abandoned coastal communities, creating an urgent insurance crisis along the Gulf Coast and the Atlantic Coast,” Taylor said in a statement.
At age 70, retiree Judy Goodman says she wouldn’t be able to pay for a replacement residence if Mother Nature destroyed her modest $170,000 home near Gulf Shores, Ala. Yet she gave up on finding affordable insurance after her policy was canceled about three years ago.
Emptying the piggy bank
But to go without insurance, Goodman first had to pay off her mortgage. And she drained her retirement savings to do it. “You may imagine the anguish this has caused me. I’m saying my prayers real hard when a hurricane is on the way,” she says.
Annie Carrell Legget, 67, opted to keep fire and theft insurance this year on her 2,000-square foot home near Mobile Bay, Ala., but didn’t buy coverage for storm damage. She understands the risk but says, “It couldn’t be any worse than being fleeced by the insurance company.”
Louisiana Insurance Commissioner Donelon says high insurance costs are just part of life for homeowners in coastal communities. Donelon himself pays $7,200 in annual premiums for his suburban New Orleans home, and would have to fork over $9,000 before storm coverage would kick in.
South Carolina began offering insurers incentives about three years ago, says Ann Roberson, executive assistant to the insurance commissioner, and a dozen new carriers are writing policies as a result. The state also created Catastrophe Savings Accounts, which let homeowners set money aside tax-free for storm-related expenses.
In Florida, the state-run pool for insurance coverage was meant to be the option of last resort. But it has become the No. 1 insurer in the state, with more than 1 million policies.
Even the rates offered by Florida’s insurance pool are too high for residents like Seymour Fleck, 84, of Delray Beach. He says he let his condominium policy lapse this year because premiums were simply unaffordable. Now he keeps his fingers crossed and hopes that this year’s hurricane season will end quietly.
Bob Calandra is a freelance writer living near Philadelphia.