Many Don't Have Enough Insurance To Rebuild Home After Disaster

NEW YORK (Ben Berkowitz) - Nearly one in five homeowners does not have enough insurance to rebuild his home if it is destroyed in a disaster, market research company J.D. Power said on Thursday in its annual survey of insurance customer satisfaction.

The survey comes just days after Hurricane Irene laid waste to tens of thousands of properties along the U.S. East Coast. The country's largest home and auto insurer, State Farm, has already received more than 52,000 claims, and estimates suggest U.S. insurers will lose up to $6 billion from the storm.

J.D. Power said 16 percent of the 9,100 holders of homeowners insurance it surveyed were undercovered. On a 1,000-point scale, customer satisfaction among that 16 percent was 40 points lower than among those who said they were sufficiently covered.

People with flood insurance were also deeply dissatisfied. Though flood insurance is provided by the U.S. government, the policies are written and administered by private insurance companies. In many cases, homeowners sign up for their flood policy from the same carrier as their regular coverage.

The average satisfaction rating for those with a flood policy was 735, a full 34 points below the industry average. People with earthquake coverage had much higher satisfaction ratings, suggesting the problem is unique to flood plans.

The National Flood Insurance Program is billions of dollars in debt, with limited capacity for repayment, and reforms are caught up in congressional in-fighting over whether those debts should be forgiven. That debate is being magnified by the extensive flooding Irene caused.

For the 10th year in a row, J.D. Power said privately held Amica Mutual was the highest-rated insurer, 25 points clear of its nearest competitor. Amica has also been the highest-rated insurer in J.D. Power's auto rankings for 12 years running.

One insurer, USAA, beat out Amica in the homeowners' rankings, but it is not counted because it caters exclusively to military families.

J.D. Power, perhaps best known for its surveys of automotive customer satisfaction, is a unit of McGraw-Hill Cos.

(Reporting by Ben Berkowitz; editing by John Wallace)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[loki]

09:56 AM on 09/04/2011

if you dont have enough insurance, whose fault is that?

I think the biggest problem is going to be contractors. Ive seen this more than a few times just with my friends and acquaintances. House burns or tornado, or whatever it is, its destroyed. Insurance finally starts to pay, contractors come in, and rip off the home owner. Yes, no one with a brain pays upfront, but the contractors submit the bills to the homeowner, ( usually on the contractors letter head so they can be faked) The homeowner and the insurance sign off on it and pay them, Problem is, the contractor doesn't pay anyone else. Your responsible for those bills, leans are put on the home, law suits, and more. The insurance paid its part, the contractor doesnt. Take them to court? Sure, I know 3 people who did just that, and they won hands down.. Not one has ever got a dime from them, and the state of Missouri doesnt pull contractor license, or allows them to apply under a different company name , no matter how many times they scam homeowners.

[srooge]

11:04 PM on 09/03/2011

GETANOTHERJOBORSELLONEOFYOURCHILDREN

[invirginia]

09:53 PM on 09/03/2011

Why spend more to rebuild when they can surely purchase at a bargain from the vast housing surplus.

[Derni]

08:21 PM on 09/03/2011

Could we also face the fact that due to global climate change we will probably have to endure worse and more frequent storms along the coasts and we should encourage people NOT to rebuild in areas that are islands or too close to flood planes etc? New Orleans was told not to rebuild and move 150 miles north -they were told this by members of St Louis University geology dept and specialists in flooding. Give them money to rebuild when the house is destroyed but also attach to it the understanding that they should not rebuild in an area where such climate events are frequent or in a flood plane.

[Kenz300]

12:18 PM on 09/03/2011

The National flood insurance program needs to be reformed. The program should only pay on a particular parcel of property once. People that are flooded out need to be moved and helped in their time of need but they should not be allowed to build in the same flood prone areas again. The property needs to be put into a flood bank and turned into wetlands, flood water storage areas, park land, farm land or some other open space. We should not pay to rebuild a property a second time.

[Mondayboy]

08:04 AM on 09/03/2011

Maybe this is nature's way of saying - you are not supposed to be living here.

[unique]

08:10 PM on 09/02/2011

The Insurance Companies don't have the money to pay the claims.

[pattileigh]

07:56 PM on 09/02/2011

From this point forward, the government should not be insuring ocean front homes. No one should build right on the ocean front. Zoning laws should prohibit it and the ocean front should just be there for everyone to enjoy for the day but no buildings should be on it. There should be a mandated distance from the high tide mark several feet back from the ocean. If someone's home washes away they get their money to build somewhere else. Other catastrophe's are impossible to avoid but this one is not.

[StopMakingSense2]

02:19 PM on 09/02/2011

It's the teabagger area so to bad so sad for you..
Keep yanking on those bootstraps and pray for a miracle if you believe in that sort of thing..

[fortressfountain]

12:45 PM on 09/02/2011

Insurance used to have to have money in reserve to cover losses. Didn't the republicans change this so insurance would not have to have as much money in the bank?
AIG certainly could not cover the losses from the mortgage instruments. The taxpayer had to pick up the tab.
Of course that means less money for dictators, wars etc.

[unique]

08:12 PM on 09/02/2011

You are so right.

WHEN IS ENOUGH, ENOUGH??????

STOP THE WARS NOW.

BRING THE TROOPS HOME NOW.

[ahzzz]

11:43 AM on 09/02/2011

Hey I have a great idea, lets deregulate the insurance industry some more. That way they wouldn't even have to put the fine print in the unreadable policies they sell.

[Carolab]

12:16 AM on 09/02/2011

Insurers in the US do not provide flood insurance coverage due to the hazard of flood typically being confined to a few areas. As a result, it is an unacceptable risk due to the inability to spread the risk on a wide enough population to absorb the potential catastrophic nature of the hazard. In response to this, the federal government created the National Flood Insurance Program in 1968.

The National Association of Insurance Commissioners (NAIC) found that 33 percent of U.S. heads of household still hold the false belief that flood damage is covered by a standard homeowners policy. FEMA states approximately 50% of low flood zone risk borrowers think they are ineligible and cannot buy flood insurance.

Anyone can buy flood insurance as long as their community participates in the NFIP, even renters. However, unless one lives in a designated floodplain and is required under the terms of a mortgage to purchase flood insurance, flood insurance does not go into effect until 30 days after the policy is first purchased.

If you are eligible, you must purchase a separate flood insurance policy through an insurance company that participates in the National Flood Insurance Program (NFIP). Flood insurance is available for residents of approximately 19,000 communities nationwide.

http://en.wikipedia.org/wiki/Flood_insurance

[democrats for life]

10:57 PM on 09/01/2011

many of these houses won't be rebuilt, way too many houses on market. you can buy a house on the market much cheaper then rebuilding

[pattileigh]

07:58 PM on 09/02/2011

If they are ocean front they will rebuild.

[retired06]

08:35 PM on 09/01/2011

Maybe if our government stops sending money to all these useless conutries that HATE the Americans, and start taking care of their own people, maybe just maybe Fema would be able to help out these unfortunate souls.

[Logicalthinker10]

10:51 AM on 09/02/2011

This is not FEMA's job. Don't buy homes in high risk areas. If insurance companies won't cover it, or they charge you extremely high fees compared to everyone else, that should tell you to move to another location.

[invirginia]

09:55 PM on 09/03/2011

wow what a straw man argument

[srooge]

07:41 PM on 09/01/2011

inthefuturenoonewillbeabletobuildcloserthanonemileawayfromoceans