As Americans, we are all supposed to be in the same boat. But when it comes to paying for flood insurance, some people who aren’t wet at the moment are objecting to helping people who are.

An article that ran last week in the Detroit Free Press was entitled, “The Inequities of Flood Insurance: When a Katrina Hits, People in Michigan Pay.” The article chronicles complaints from homeowners in flood plains that they are paying a state average of $585 a year for flood insurance. One resident whose house is on a bay with a dock for his boat pays $399 a year for flood insurance, but objects because the water level is four feet below his seawall. “I’m actually paying for literally nothing,” he said.

The premise of the article is built on a misunderstanding of how insurance works. It attempts to pit residents of one area of the country against residents of another. It also raises the unfounded suspicion that the reason that the National Flood Insurance Program (NFIP) is revising flood maps is because it needs more money as a result of payouts due to Hurricanes Katrina and Rita.

FEMA and NFIP officials are quoted refuting these wrong assertions. And the best explanation is offered by – of all people – J. Robert Hunter of the Consumer Federation of America. Not often known for the accuracy of his comments about the insurance industry, Hunter said states like Michigan pay for repetitive losses in states like Mississippi and Louisiana because, “It’s the nature of insurance.” (Back in November, Mr. Hunter appeared with PIA’s Pat Borowski on CNN, to debate PIA’s endorsement of federal natural catastrophe legislation, but it wasn’t much of a debate — he mostly agreed with PIA. Perhaps Mr. Hunter is finally seeing the light.)

If you would like to send a Letter to the Editor of the Detroit Free Press about this article, here is the email address to use: letters@freepress.com. If you do, please send a copy to PIA National at tedbe@pianet.org. Thanks!

The Inequities of Flood Insurance: When a Katrina Hits, People in Michigan Pay (Detroit Free Press 2/9/06)

February 14, 2006