Is Insurance a scam if companies do not honor policies such as for Katrina?

Question

Is Insurance a scam if companies do not honor policies such as for Katrina?

Answer 1

It's not a scam.

It's really a matter of education. Insurance policies are not designed to cover EVERYTHING. If they did, people would pay 10 to 15 times more than they already do.

A homeowners policy has a standard coverage exclusion for "ground water" (flooding) coming into the house. In order to have that covered you would need to have a flood policy.

If wind tears of your roof and a ton of rainwater gets in through the hole, then that is covered. The problem is trying to figure out what happened first, flood waters coming into the house (not covered) or the wind tearing the roof off and then rainwater falls into the house. Personally, I think that if it can't be determined what happened first then the policy should pay, but I don't make the rules.  

You also need to understand that every word in an insurance policy/contract is approved by the state. So these flood exclusions don't just pop up out of nowhere when there are disasters.

Answer 2

OK, "act of God" is NOT an insurance term.  Acts of God are NOT excluded from a homeowners policy.

FLOOD, however, IS excluded.  So, if you buy a Ford, and you don't get a Mercedes, is THAT a scam?  You get what you pay for.  If you have no idea what you bought, shame on you - or shame on your agent, for not explaining that FLOOD is a seperate POLICY.

Answer 3

No never. Katrina would be considered an act of god.

Acts of God are not covered in any insurance Policy.

Sorry

Answer 4

It all depends on if the damage was a covered loss.  The devil is always in the details.

Answer 5

Yes, it's a scam.  I went down to New Orleans about 6 months after Katrina to help with the ongoing cleanup effort, and I talked to several people that had flood insurance and didn't get anything or not nearly the coverage to which they were entitled.  I was talking with a bus driver whose insurance company declined his claim because the damage to the house was from "rain and wind, not floods"--nevermind he had floods 12 feet up his house.  I heard so many stories just like that.  It's ridiculous.