As the discussion continues about mandatory flood insurance I keep thinking about how car insurance is handled, with one standard for everyone, you need so much insurance to be able to drive, period.
I wonder if anyone has done the research to determine how making major disaster insurance (flood, hurricane, tornado, and earthquake) mandatory for anyone to own a home would affect insurance and mortgage rates.
The argument that only those who live in a flood plain or earthquake zone may, on the newest research, not be as appropriate as it once was since even desert communities have flash floods and new earthquake zones have been discovered.
An excerpt.
Keeping flood insurance afloat
House OKs bill to help program swamped by Katrina claims
Published 12:01 am PDT Tuesday, July 4, 2006
WASHINGTON -- Hurricane Katrina didn't just expose the deficiencies of levees for flood protection. It highlighted the weaknesses of the National Flood Insurance Program that helps homeowners and businesses rebuild after levees fail.
The program, which in the best of times barely breaks even, was swamped with 225,000 claims after Katrina, forcing it to resort to congressionally authorized borrowing. The debt is set to rise to $25 billion in a bill approved last week in the House and working its way to the Senate floor.
Congress is determined to put the program on a firmer financial footing.
That's good news for the 50,895 residents and businesses in the Sacramento area enrolled in the program. They also would be able to take advantage of higher coverage limits, which haven't been adjusted since 1994, under the pending legislation.
Rep. Doris Matsui, D-Sacramento, praised the bill when it was passed June 27 on a 416-4 vote.
"These are all positive steps that will allow the program to continue to provide peace of mind to those impacted when a flood event occurs," Matsui said.
But for many of the subscribers, the changes likely will mean steadily rising rates. Both the House and the Senate propose raising the ceiling on how fast rates can be increased in a year, from 10 percent to 15 percent.
Beyond that, both chambers are looking for ways to end subsidized rates for an estimated 1.2 million policyholders -- almost one out of every four -- whose homes and businesses were built either before flood zones were laid out, or before 1975.
