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Why do so many homeowners in Houston not have flood insurance?

I'm with you here, if you can make the numbers work.

But in my area a $500 deductible on a $350K property runs around $750/yr.

It would take an awful lot of years, even if invested well, to provide adequate catastrophic self-insurance in this case. Each case has to be taken individually on it's own merit. If it works for you, good. I'm envious. But it may not work for everybody.

I also am 100% with you on a house maintenance savings fund. Everyone should have one.

It would depend on you risk level too. I'm a very low risk level so I self insure. I'm betting we won't flood so much that I can't cover cost of repair with cash and/or loan. I don't have to have the full value of my home. Just the cost of repairs.

Most repairs are dry wall, insulation, carpet, furniture, cabinets, etc. Where I'd really be hurt is if the foundation shifted and I'd have to get it jacked. That might need a loan. The rest is inexpensive enough.


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It would depend on you risk level too. I'm a very low risk level so I self insure. I'm betting we won't flood so much that I can't cover cost of repair with cash and/or loan. I don't have to have the full value of my home. Just the cost of repairs.

Most repairs are dry wall, insulation, carpet, furniture, cabinets, etc. Where I'd really be hurt is if the foundation shifted and I'd have to get it jacked. That might need a loan. The rest is inexpensive enough.


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Are you speaking specifically of flood insurance, in your earlier post?

I was speaking of general homeowner's insurance.

Maybe I misunderstood ... I came in in the middle of the conversation ...
 
In most cases, the legally required coverage, like all insurance, is zero.

Flood insurance is never included in the typical homeowners package.

There is one source of flood insurance, That's FEMA.

Lenders may require flood insurance if the property is located in a FEMA 100 year flood plain, and generally do. Otherwise, you are on your own, it's your decision. The consequences of the decision are also the obligation of the homeowner.

Not wishing to get in an argument. Those are the facts.


Another slightly off topic fact. Property insurance, if purchased as a condition of a loan, does not always insure the homeowner's position. The lender is interested only in covering their position. It's up to you to cover yourself. That applies to both property insurance and flood insurance.
ditto for title insurance
 
Are you speaking specifically of flood insurance, in your earlier post?

I was speaking of general homeowner's insurance.

Maybe I misunderstood ... I came in in the middle of the conversation ...

Yes, just flood. I wouldn't self insure for something as great of a risk as a whole loss.
 
In Illinois, lenders require their borrowers to obtain flood insurance if their home is in a designated flood plain. Should be like that everywhere, imo.



I live near the ocean front and am 800 ft above see level. The city is built on a mountain, why would I have to have flood insurance? To help pay for the ones who can't afford it?
 
ditto for title insurance

That too, although title insurance is generally paid for by the seller since the seller is the one delivering the title.
 
I live near the ocean front and am 800 ft above see level. The city is built on a mountain, why would I have to have flood insurance? To help pay for the ones who can't afford it?

That is the argument for the 100 million being spent on advertising spent on Ocare advertising. Without the healthy paying more than their exposure would indicate, the program cannot sustain itself.

Off topic, I know, but the same principle applies.
 
I live near the ocean front and am 800 ft above see level. The city is built on a mountain, why would I have to have flood insurance? To help pay for the ones who can't afford it?

The gvmt wouldn't designate your land as a flood plain.
 
They don't have to, so they don't. That's the #1 reason.

Self-insured...maybe millionaires, otherwise, there's no such thing. If it's a catastrophic flood, you're basically getting FEMA assistance and the good will of others, or you're out potentially hundreds of thousands of dollars. Look up stats, the average American has want, $1000 savings? Not gonna cut it.
Some people will literally never recover.

I did not have flood insurance, I asked, and they said "it's not necessary in your area". Then my parents got that LA 500 year flood last year and lost half the house, they didn't' have it either. So we told our agent we'd like flood insurance. Turns out it wasn't that expensive, I think some hundreds for the year. We have more than enough to cover a complete loss, but the insurance is still nice to have, no need to destroy a big nest egg just because.
 
That too, although title insurance is generally paid for by the seller since the seller is the one delivering the title.

but as with the other insurance required by the mortgagee, the assignment of insurance inures only to the mortgagee unless the mortgagor ponies up to add coverage for him/her self under that/those policy(s)
 
In most cases, the legally required coverage, like all insurance, is zero.

Flood insurance is never included in the typical homeowners package.

There is one source of flood insurance, That's FEMA.

Lenders may require flood insurance if the property is located in a FEMA 100 year flood plain, and generally do. Otherwise, you are on your own, it's your decision. The consequences of the decision are also the obligation of the homeowner.

Not wishing to get in an argument. Those are the facts.

Another slightly off topic fact. Property insurance, if purchased as a condition of a loan, does not always insure the homeowner's position. The lender is interested only in covering their position. It's up to you to cover yourself. That applies to both property insurance and flood insurance.

I agree with everything but your first line. Car insurance requires a minimum of liability, and the majority of us don't yet own our houses, and are therefor legally required to purchase homeowners insurance.
 
I agree with everything but your first line. Car insurance requires a minimum of liability, and the majority of us don't yet own our houses, and are therefor legally required to purchase homeowners insurance.

a minor distinction; i don't believe anyone has a lawful obligation to homeowner's coverage. instead it is standard contract boilerplate making such coverage (payable to the mortgagee) a condition of the mortgage remaining in good standing, where failure to continue such coverage would place the mortgagor at default. the lender has very good reason to want its primary source of collateral protected against loss
 
a minor distinction; i don't believe anyone has a lawful obligation to homeowner's coverage. instead it is standard contract boilerplate making such coverage (payable to the mortgagee) a condition of the mortgage remaining in good standing, where failure to continue such coverage would place the mortgagor at default. the lender has very good reason to want its primary source of collateral protected against loss

I have an FHA loan, which is a federally secured loan.
 
I agree with everything but your first line. Car insurance requires a minimum of liability, and the majority of us don't yet own our houses, and are therefor legally required to purchase homeowners insurance.

Neither point is universally correct. Auto liability insurance is required in most, but not all states. No state that I know of requires you to insure your auto's as property. I drive old cars and am self insured. I carry liability to protect my assets, not due to any requirement. Virginia has an uninsured motorist pool. Not that I'm in favor of the idea, since the uninsured tend to be those least likely to have the assets necessary to cover losses caused by their negligence.

The latter is completely incorrect. I know of no state that requires you to insure your property. Lenders may require their position to be insured, but the law doesn't.
 
Neither point is universally correct. Auto liability insurance is required in most, but not all states. No state that I know of requires you to insure your auto's as property. I drive old cars and am self insured. I carry liability to protect my assets, not due to any requirement. Virginia has an uninsured motorist pool. Not that I'm in favor of the idea, since the uninsured tend to be those least likely to have the assets necessary to cover losses caused by their negligence.

The latter is completely incorrect. I know of no state that requires you to insure your property. Lenders may require their position to be insured, but the law doesn't.

Not state, federal requirement, if you have an FHA loan.
 
I have an FHA loan, which is a federally secured loan.

The loan is insured, not you. Default on your payment whether because of total loss or simply failure to pay, the lender is made whole, you get Zip.

Back to the topic. One reason that so many go uninsured is that many do not understand what their insurance covers. Another major reason is that many have paid off their mortgage and have elected to take the gamble. Knowingly or unknowingly. All too often it is those on fixed income, i.e. the seniors who elect to forgo coverage. They are also those least likely to have the ability to recover.
 
Not state, federal requirement, if you have an FHA loan.

Incorrect. FHA insures the lender against capital loss up to the loan value in the event of default, not you. PMI does he same thing, but privately. Neither has an obligation to a third party or you.

You are never legally required to insure your property against physical loss.
 
Incorrect. FHA insures the lender against capital loss up to the loan value in the event of default, not you. PMI does he same thing, but privately. Neither has an obligation to a third party or you.

You are never legally required to insure your property against physical loss.

Learn something new everyday.



Especially here. Thanks!
 
Learn something new everyday.



Especially here. Thanks!

Meanwhile, back to why so many end up uninsured. Ignorance plays a large part. The fact that more than a few would rather buy cigarettes than health insurance is also a factor. Some just don't get around to getting the job done.
 
Meanwhile, back to why so many end up uninsured. Ignorance plays a large part. The fact that more than a few would rather buy cigarettes than health insurance is also a factor. Some just don't get around to getting the job done.
Or beer. Don't forget the beer.
 
It's retarded to not have flood insurance especially if you live along the Gulf coast. That area is very prone to tropical storms and hurricanes that can easily dump a year's worth of rainfall in several days. Why would anyone knowingly live in a region like this and not be fully insured?
 
My wife is from Houston and almost all of her family is still down there. If you have ever been to Houston then you know that entire metro is at or near sea level (I think its about 50 feet above sea level on the North side of Houston). The area is covered in creeks, bayous, and canals. There are no hills until you get damn near to Huntsville. So even if you don't live in an official floodplain, you would be hard pressed to look at any of it and not think it couldn't potentially flood.

Only about 2 in 10 of those flooded have flood insurance. I looked up the average cost of flood insurance for Texas, it is $482 dollars or about 40 dollars a month. https://www.valuepenguin.com/average-cost-flood-insurance#nogo

So in the scheme of things, as a homeowner, its not that expensive. So why do so few home owners down there have it? I can see why folks in 3rd or 5th wards don't have it, those are impoverished areas where another $500 dollars a year might not be doable, but for all these folks in $250k homes and up, it just seems pretty irresponsible.

1. Much of Houston is built on what used to be wetlands than are now paved over. Wetlands make great sponges. But with much of that sponge gone, where will all that excess water go?
2. Many homeowners were told they were not living in a flood zone.

Do these facts answer your question?
 
Why do so many homeowners in Houston not have flood insurance?

because it's ****ing expensive, and they don't have the money, most likely.
 
I am not even remotely any kind of insurance expert but five bucks says that sometime in the next few years, flood insurance is going to change drastically.
The maps are going to change drastically, the amount of coverage you can expect will change drastically, and the price, even for the most bare bones policy, will change drastically.

As you might have noticed, I used some conjugation of the word "drastic" several times.
Yeah, drastic, as in "drastically drastic", as in "Holy CRAP, flood insurance has gone through the roof and good God look at those deductibles!!"

I'm not an expert but I bet it's damn near impossible to get flood insurance in Miami FL anymore, amirite?
I bet Houston follows soon after.
 
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