# Coming soon to bankrupcy court: the insurance companies **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [September 16, 2005, 1:31am UTC](https://boards.straightdope.com/t/coming-soon-to-bankrupcy-court-the-insurance-companies/321898 "2005-09-16T01:31:03Z")\ **Posts on this page:** 8\ **Page:** 1
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [September 16, 2005, 1:31am UTC](https://boards.straightdope.com/t/coming-soon-to-bankrupcy-court-the-insurance-companies/321898/1 "2005-09-16T01:31:03Z")
The Attorney General of Mississippi is [suing insurance companies](http://money.cnn.com/2005/09/14/news/mississippi_flood.reut/index.htm) to force them to pay for the damage cause by hurricane Katrina. Sigh. His heart is in the right place, but his brain isn’t. Insurance policies don’t normally cover flood damage. This is because the insurance companies all know damn well that if they did, a major flood would cause them to go broke. The only tangible result of these lawsuits will be a rash of bankruptcies in the insurance industry, with millions of people’s insurance policies becoming worthless. ---
**Author:** ![OtakuLoki](https://avatars.discourse-cdn.com/v4/letter/o/ac8455/32.png) [@OtakuLoki](https://boards.straightdope.com/u/OtakuLoki)\ **Post date:** [September 16, 2005, 1:43am UTC](https://boards.straightdope.com/t/coming-soon-to-bankrupcy-court-the-insurance-companies/321898/2 "2005-09-16T01:43:20Z")
Actually, I believe the reason that most insurance companies don’t offer flood insurance doesn’t have to with going broke, _per se_, but that they’d go broke trying to match the rate of the US gov’t sponsored flood insurance. Slight difference, there. As an aside - is it unreasonable for me to think that persons in LA, and MI, should have done all they could to get said flood insurance? I know many people can’t afford flood or even renter’s insurance. (Homeowners usually have to have to qualify for mortgages.) But it’s not all that expensive. Which is why those big houses on barrier islands keep being rebuilt. So, wouldn’t you think very hard about flood insurance in a hurricane prone area like that? ---
**Author:** ![RealityChuck](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/realitychuck/32/195_2.png) [@RealityChuck](https://boards.straightdope.com/u/RealityChuck)\ **Post date:** [September 16, 2005, 2:40am UTC](https://boards.straightdope.com/t/coming-soon-to-bankrupcy-court-the-insurance-companies/321898/3 "2005-09-16T02:40:06Z")
Houses on barrier beaches are covered by general insurance, not flood insurance. The damage is rarely due to flood. Flood insurance is rarely offered because in the insurance industry, a “flood” is any kind of water damage, including things like broken pipes. The government provides the insurance simply because the private sector doesn’t want to have to pay off whenever someone has a leaky roof. ---
**Author:** ![MrPeabody](https://avatars.discourse-cdn.com/v4/letter/m/7cd45c/32.png) [@MrPeabody](https://boards.straightdope.com/u/MrPeabody)\ **Post date:** [September 16, 2005, 4:39am UTC](https://boards.straightdope.com/t/coming-soon-to-bankrupcy-court-the-insurance-companies/321898/4 "2005-09-16T04:39:31Z")
> [@RealityChuck](#): > > Houses on barrier beaches are covered by general insurance, not flood insurance. The damage is rarely due to flood. > > Flood insurance is rarely offered because in the insurance industry, a “flood” is any kind of water damage, including things like broken pipes. The government provides the insurance simply because the private sector doesn’t want to have to pay off whenever someone has a leaky roof. This is not correct. In most cases water damage due to the sudden and accidental discharge of water such as pipes breaking, water heater breaking, dishwasher overflowing, is covered under a standard homeowner’s policy. Where the exclusion for flood comes in is in the clause “rising water” So if the water rises up over the property it is considered a flood and excluded but if it is caused by a sudden discharge in the house, or by wind (such as when a roof is damaged and rain comes in) or fire (damage caused by water hoses) these would be covered losses. ---
**Author:** ![crazyjoe](https://avatars.discourse-cdn.com/v4/letter/c/f14d63/32.png) [@crazyjoe](https://boards.straightdope.com/u/crazyjoe)\ **Post date:** [September 16, 2005, 3:10pm UTC](https://boards.straightdope.com/t/coming-soon-to-bankrupcy-court-the-insurance-companies/321898/5 "2005-09-16T15:10:31Z")
> [@OtakuLoki](#): > > As an aside - is it unreasonable for me to think that persons in LA, and MI, should have done all they could to get said flood insurance? Minor nitpick here, but the people in Michigan (MI) (except in certain low-lying areas) don’t typically need to think about flood insurance. The people of Mississippi (MS) probably do. Carry on… ---
**Author:** ![Honey](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/honey/32/5074_2.png) [@Honey](https://boards.straightdope.com/u/Honey)\ **Post date:** [September 16, 2005, 4:48pm UTC](https://boards.straightdope.com/t/coming-soon-to-bankrupcy-court-the-insurance-companies/321898/6 "2005-09-16T16:48:51Z")
If there is a mortgage on the home and it’s located in a flood prone area, the mortgagee will most likely require homeowner’s as well as flood insurance. Those people who have paid off their mortgages may no longer be carrying flood insurance. ---
**Author:** ![Inigo\_Montoya](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/inigo_montoya/32/124_2.png) [@Inigo\_Montoya](https://boards.straightdope.com/u/Inigo_Montoya)\ **Post date:** [September 16, 2005, 5:02pm UTC](https://boards.straightdope.com/t/coming-soon-to-bankrupcy-court-the-insurance-companies/321898/7 "2005-09-16T17:02:25Z")
> [@](#): > > The…attorney general believes that Katrina’s horrific winds caused the flooding Interesting thought process. It wil be interesting to see how this one turns out. I’m not familiar with hurricaine conditions, but I’d expect that if the wind is strong enough to move a sufficent volume of water to flood a house that the same wind will be hard at work tearing the damned thing apart anyway…which usually is covered. Except in states that cover wind damage only as an endorsement. ---
**Author:** ![Shagnasty](https://avatars.discourse-cdn.com/v4/letter/s/9dc877/32.png) [@Shagnasty](https://boards.straightdope.com/u/Shagnasty)\ **Post date:** [September 16, 2005, 5:16pm UTC](https://boards.straightdope.com/t/coming-soon-to-bankrupcy-court-the-insurance-companies/321898/8 "2005-09-16T17:16:56Z")
> [@Inigo Montoya](#): > > I’m not familiar with hurricaine conditions, but I’d expect that if the wind is strong enough to move a sufficent volume of water to flood a house that the same wind will be hard at work tearing the damned thing apart anyway…which usually is covered. Except in states that cover wind damage only as an endorsement. I thought that a storm surge is a massive amount of water moved by the storm’s winds.