Many of the people who lost their homes after the hurricanes this summer did so due to the flooding. While the hurricane caused the flooding, many times that isn't enough for homeowners insurance to actually cover the cost of the damage to a home.
People love to live on the beach despite the risks, which include “flooding or stepping on pointy sea shells, or mistakenly giving a Tostito to a seagull without realizing that means you’ll spend the rest of your life haunted by a Tostito-addicted seagull,” John Oliver said Sunday. Anyone choosing to live near the water runs the risk that they'll end up being flooded at some point in their home ownership. Perhaps that's why so many beach houses seem to be built on stilts.
"But while floods are often referred to as natural disasters, the truth is, the damage they do often, to some extent, within our control," he explained, "because we have made certain decisions that put and keep people and property in the path of flooding. And that is what this story is about." To make matters worse, municipalities are choosing to pave over naturally absorbent areas that could have easily soaked in the flood waters if a highway wasn't in its place.
According to Oliver, anyone who purchased their home using a federal home loan is insured by the National Flood Insurance Program (NFIP). The whole purpose of the program was to lessen the cost of disaster relief.
When it was crafted in the 1960's, it was supposed to simply be a temporary fix for families. The hope was people would move away from flood-prone areas because it puts their lives and property at risk. Instead, cities like Miami are seeing a huge housing boom as ocean waters are slowly creeping up to city roads. As former Vice President Al Gore said in his updated documentary "An Inconvenient Sequel," we need to look no further than Miami for proof of sea levels rising.
Floods have hit the same areas so frequently that the federal government is now in a position that they're forced to repair the same home over and over again. They consider them “repetitive loss properties,” and admittedly, some of them are often second homes of wealthy people seen on HGTV trying to find the perfect place on the beach. Oliver showed a clip of two brothers looking at a home on the beach. One brother had concerns, so the other brother replied, "that's what insurance is for."
Today, people aren't using the NFIP to move to higher ground and rebuild their lives. In large part because, "that's not how people work," Oliver said. In fact, "huge risks to our personal safety for the sake of a discount — that was the entire premise behind the McDonald's Dollar Menu."
The program's incentives and execution need to be retooled, Oliver explained. "For insurance companies, the bigger the disaster, the more they stand to profit," and only a few houses will get a "shockingly big chunk" of the program's benefits.