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wundayatta's avatar

How do you think the devastation from Sandy will affect our willingness to insure shore homes?

Asked by wundayatta (58357 points ) October 31st, 2012

I’ve been looking at pictures of the devastation. In some areas, it seems like half the houses have been wiped away. These are homes that, if insured, are insured by a Federal program that I do not believe takes in enough premiums to cover the pay outs. I think that tax dollars make up the difference at times. I think that all the people of the nation are subsidizing the very few who are rich enough and lucky enough to own a shore home.

If this is true, do you think this is a wise policy? Should we encourage people to rebuild in places where storms can come along like this and wipe them all out? If so, should we have any requirements about how strongly they build? Should we be paying for their beach replenishment?

Or should we make them pay fully for rebuilding their houses if they can’t get private insurance? Should they pay for all the beach replenishment themselves with no subsidies of any kind?

Or should we not allow them to rebuild at all? It seems to me that some properties aren’t even there any more. Who should put the sand back if we allow it to go back? If their property is now underwater, should they be allowed to rebuild it?

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16 Answers

CWOTUS's avatar

Should we encourage people to rebuild in places where storms can come along like this and wipe them all out?

Like New Orleans?

Ponderer983's avatar

I think this is a large can of worms to open that will take more than a response here can handle. Unfortunately, this magnitude of storm is not common, and the kind of devastation is not common (like @CWOTUS said about New Orleans). If you live in typical flood plains, you are required to have flood insurance, raising your premium. But the question you are posing has such a large ripple effect. You are looking specifically at one disaster. What about people who live in tornado alley, in California by the fault lines, in Florida and other more typically prone hurricane areas, in our colder climates where blizzards are frequent, wildfires (like in Colorado earlier this year), etc.? There were also places affected that have NEVER seen water problems and aren’t considered flood areas.
I guess what I am trying to say is that no matter where you live, there is always a risk of a weather caused catastrophe that no insurance plan can ever foresee. Insurance is a big money maker, so I’m sure, that even in these times, the companies are making money. Plus, this will make people increase their coverage because now they know it can and has happened to this magnitude. My boss has already called to include flood and hurricane insurance. And as far as our tax dollars being used, you are right, but our tax dollars get spread over all government agencies, so to pinpoint and organization like FEMA seems a bit flippant.

ETpro's avatar

Voters may be stupid and easily influenced by the billions the fossil fuel industry is spending sewing fear, uncertainty and doubt about the destruction their industry is bringing to our environment. But Insurance Company executives are not stupid. They know global warming is real and man-made. They know that means sea levels will rise at an ever accelerating pace for several centuries, and that extreme weather events like Hurricane Sandy will no longer be the 1000 year storm, or the 100 year storm, but regular events happening ever more frequently.

Look for insurance reforms that will make realistic protection of buildings anywhere in a coastal flood plain unfordable for anyone in their right mind. That matters, because some ¼th of the total US population live in coastal flood plains that are at an ever rising risk of catastrophic weather events.

JLeslie's avatar

Flood insurance does not cover the whole value of a house. I think the upper limit is $250k, I found this to support how I remember it. Something like 50% of homes that flood are not in high risk flood areas, and so many people who do flood don’t have insurance for it. People on the coast probably all pay into the system, I know if you have a mortgage it would be required. I’m thinking maybe people who typically don’t think they will flood and don’t live in a flood area are the ones really making out by not paying in and benefitting from FEMA help. I think FEMA helps with windstorm also if a home is ruined in a natural disaster, not sure. Or, at least FEMA helps to get people food, water, and other basics.

Most states want to maintain their shore line. Parts of FL tend to gather sand, while others lose sand as a natural process over time, with hurricanes also doing massive amounts in a very short time. FL moves the sand around anyway to maintain beaches.

Jaxk's avatar

I love the way we boil everything down to rich vs poor. In New Orleans we assume they were all poor so no matter what we spend, it’s not enough. On the Jersey Shore, we assume they’re all rich, so no matter what we spend, it’s too much. And of course, it doesn’t matter whether you are really rich or poor, only the perception of whether you are rich or poor. If you are perceived as rich, let’s ignore the fact that you’ve paid for flood insurance. Hell, not only ignore the claim but let’s make you pay for the beach erosion. That sounds fair. Let’s not only make you pay but let’s not allow you to rebuild. Maybe we could actually make you pay for rebuilding other houses that were not directly on the beach (maybe back a few blocks) because those people were obviously not as rich as you. Of course they may now have beach frontage due to the beach erosion so next time they’ll be the victims of our angst. Yes dear hearts, that sounds like the way to go.

ETpro's avatar

@Jaxk I’m not sure what “we” you are speaking for, but I’ve not seen anyone here advocating having those in high-rent districts rebuild the coast themselves. My heart goes out to rich and poor alike. Sure the rich can handle the impact easier than the poor, but losing your home and all your family heirlooms is something no insurance or bank account can fix. It is just incredibly more difficult for those who are poor to deal with the impact of such a storm.

As to global warming and more severe storms, here is a very simple, easy to grasp explanation of why we cannot say Sandy was due to global warming, but we can absolutely say that we’ll get more and more storms as bad as Sandy or worse because of man-made climate change.

Jaxk's avatar

@ETpro

Maybe you should read the question.

“Or should we make them pay fully for rebuilding their houses if they can’t get private insurance? Should they pay for all the beach replenishment themselves with no subsidies of any kind?”

The question itself makes the assumption that all those who lost thier homes are rich. I suspect if you are rich or poor camping on the beach in this weather, you’re feeling the same pain.

Just for the record, weather patterns change and we will continue to get storms whether you drive a Prius or a Suburban. The Atlantic is warmer and the Pacific is colder. That alters weather patterns.

bolwerk's avatar

I don’t think a willingness to insure shore homes will ever disappear. It will get more expensive. Insurance only needs to cover probability, which is high here.

I’m not saying the government giving aid to those who need it is a problem here, but having the government pay to rebuild properties on those types of flood plains is a bit ridiculous. This WILL happen again, regardless of climate change. Nobody needs to live either on a beach nor near a flood plain, so absolutely private insurance should be what covers such gaudy settlements.

That said, it’s hard to ignore the wider spectrum of dumb government policies that create these conditions. Effectively mandating car-based development all but guarantees further exacerbation of the climate problem.

Linda_Owl's avatar

I think, that as storms continue to get increasingly severe, people are going to have to move further in-land – away from the coastal areas. I always thought this would happen in Miami, Florida first, but after seeing the altered coastal area of NJ, it may start in NJ. I have no idea how a state with this much coast line could go about keeping the water out? And with all of the subway systems in NYC, how would you keep the water out of the underground subway systems? However, if the insurance companies can come up with Flood Insurance that some will be able to pay – people will do their best to continue to live on the coasts.

SpatzieLover's avatar

I live inland in Wisconsin. I reside in a 100yr flood plain apron which after many additions of detention & retention ponds, still allows for significant flooding every 2yrs or so.

I pay FEMA $2K per year. If I ever happent to make a claim, they’ll pay out about $250K and nothing for contents. If I got a payout, I wouldn’t be able to rebuild, as the payout is a buy out when you reside in a flood plain.

Something like 40% of the homes in my state are susceptible to significant flooding. I think you need to take into account that climate change isn’t just affecting shorelines.

wundayatta's avatar

@Linda_Owl Mayor Bloomberg is raising the issue of putting in barriers that would keep water from flooding Southern Manhattan. There would be two barriers, one along the East River somewhere, and one between Staten Island and New Jersey somewhere. They would be open for ship traffic most of the time, but would close in times where necessary. They’d cost about 3 or 4 billion, I think the radio said.

Another alternative is just to build barriers around places that get swamped, like the Brooklyn Batter Tunnel and all the entrances to the subways in South Manhattan. That is not considered as long term a solution.

I don’t think anyone is considering building barriers along the Jersey shore…. no. I take that back. Some communities built sand dunes. They did fine in this storm. Other did not. They got destroyed. It will be interesting to see if people are willing to sacrifice the view in order to protect the houses.

@Jaxk What is your opinion about sand dunes? Should people in a community be forced to build them if a majority support it? Should everyone be forced to pay for it? Or not?

ETpro's avatar

@Jaxk Thanks for explaining that “we” means @wundayatta. And reading the OP, I don’t see any refusal to care about the rich. It’s more a question of whether the sea coasts and their danger should be left only to those who can afford to take the risk, and should they expect taxpayer help when they lose the bet.

Did you bother to check out the link about the role of man-made global warming in weather extremes?

Being a denier is going to keep getting harder. Big oil will even drop the ruse at some point, because unlike the disinformation campaign big tobacco still funds in third world countries, the damage of climate change will begin to cost the fossil fuel industry more than fighting awareness of it will save them. They will realize that they aren’t in the coal or oil business, they are in the energy business. And they can profit more from solving the problems related to excess CO2 emissions than they can from funding junk science and disinformation campaigns.

anartist's avatar

There have been big storms before. There will be big storms again.
People will build. Insurers will insure.

Do you think insurers refused to insure US skyscrapers after 9/11?

bolwerk's avatar

9/11 affected a few blocks. Sandy affected several entire cities, and much hinterland.

It’s definitely gonna shake up how insurance works.

Jaxk's avatar

@wundayatta

The beaches are available for the general population not just the first line of homes. A community prospers when they have tourism and that justifies some civic involvement. The last time I was in Atlantic city was several decades back. There was no gambling or big resorts. It was a sleepy little, beat down beach community. Whether than has changed for the better or worse is a personal opinion but the community can make the choice of what improvements benefit it. Same with the state. As with any community, if you choose to live there, you pay the taxes to support the services. No one gets to say ” don’t like that service so I won’t pay the tax”. Fight the initiative if you don’t like it but if you lose pay up or go to jail (or lose your property etc.).

Jaxk's avatar

@ETpro

Of course I saw the cartoon. Unfortunately, I’m still more concerned with global cooling than I am with global warming. If we’re concerned about ‘Sea Rise’, maybe we could blow up the moon and stop this whole high tide scenario that gives us such fits.

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