TBO.com - TBO is Tampa Bay Online

Katrina Inspires Push For Merged Policies

ADVERTISEMENT

The Associated Press

Published: June 26, 2008

Nationwide Mutual Insurance Co. is lobbying Congress for permission to allow insurance companies to include flood coverage in homeowner policies. The vast majority of flood insurance policies are currently sold by insurers but subsidized by the National Flood Insurance Program.

Why does Nationwide want to do this?

Nationwide says Hurricane Katrina inspired its plan to merge wind and flood coverage into one policy. Insurance companies paid for billions of dollars in wind damage from the August 2005 hurricane, but thousands of policyholders sued insurers for refusing to cover damage that the companies blamed on Katrina's storm surge. Bringing the two forms of coverage under one policy, Nationwide says, should ease confusion and help avoid costly litigation spawned by wind-versus-water disputes with policyholders.

Doesn't my policy already cover flood damage?

Federally subsidized flood insurance is sold by insurers separately from their homeowner policies, which vary in their terms but generally limit coverage to damage caused by a hurricane's winds and exclude damage from rising water. If your home is flooded by a storm surge, your policy probably won't cover repairs.

Isn't it clear whether damage was caused by wind or flooding?

Not always, and that's why many Gulf Coast homeowners sued insurers after Katrina.

How would Nationwide's plan work, and what would it cost?

The details of its plan are still in the works, but Nationwide has posted an outline of the proposal on its Web site at www.nationwide.com/ newsroom/ehip-proposal.jsp. Nationwide says it would sell flood insurance at the same price as NFIP policies, but policyholders could buy flood coverage beyond the limits of the national program. Also, unlike other homeowner rates, prices for Nationwide's expanded policies would be exempt from state regulation. However, the Treasury Department would regulate and "reinsure" Nationwide's policies.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT