NO LOVE FOR INSURANCE COMPANIES

This commentary appeared in the Fargo Forum on July 26, 2009.

We live along the Red River in south Moorhead.

We built a 20,000 sandbag dike in March. An Army Corps of Engineers supervisor said it was one of the best he’s seen--thanks to my wife’s extended family, friends, and co-workers past and present. Our dike held: no water came over, through, around, or under it. Ordered to evacuate, we left our home by boat on March 26, 2009. In our absence, we got water and sewer back-up in our basement because of human error and mechanical breakdown.

The easy work was over.

Now we had to deal with the insurance companies.

We paid $3,400 in flood insurance last year.

The flood insurance adjusters came into town from out of state, took their measurements, and disappeared. We couldn’t understand much of what they said and the “experts” we talked to had conflicting opinions—everyone had an opinion—few had accurate answers. I went back to the Recovery Center three times and finally said to the good folks there: “I don’t care if the answer helps us or hurts us, just get us the right answer to our questions.”

We learned that flood insurance—paid by homeowners--is for the protection of bankers--not homeowners--unless your home floats down the river. We couldn’t understand their “proof of loss” document or even how much our settlement would be. Insurance companies must save billions in claims by confusing people who give up in frustration. We weren’t satisfied with the amount flood insurance paid but it was all we were going to get. We accepted the settlement.

I complained to every politician and FEMA person I talked with about the cost of flood insurance. Finally a FEMA liaison with flood insurance told us that we should have been given a grandfathered rate when we were required to buy flood insurance in 2000. We examined our agent's file; it seemed clear that a mistake had been made. Our insurance company said the file wasn't true. We are taking the next step needed to get our rate changed and to get a refund. On this issue, we won’t settle.

My advice to residents of Fargo/Moorhead who are considering flood insurance: educate yourselves so you know what is covered and what is not. Be sure you understand what flood zone you are in and be sure you get the correct rate. You have to become your own expert.

Our homeowner’s insurance adjuster visited and did his inspection and then began giving our name out to local vendors who called to solicit our cleanup business. I complained to the insurance company about this violation of privacy. They apologized and an attorney from the company called to say how sorry he was. They then declined to cover the sewer backup and sump pump failure because it occurred during a flood, which isn't covered. The sewer back-up had nothing to do with the flood; it was the result of human error.

Not happy with our homeowner’s insurance company, we shopped around. Five of the largest companies turned us down because we had a flood this year (even though they don’t insure against floods) and hail damage two years ago. Forty years of paying premiums with few claims doesn’t matter. Insurability depends on the weather.

Dealing with an insurance company is an exercise in cognitive dissonance.

We learned that the unwritten contract between insurance companies and those they insure has changed: it is now, “Pay your premiums on time and in full. Then self-fund your losses so as not to get canceled by the insurance companies.” Insurance companies re-victimize the victims, and they get rich. This is why we disdain insurance companies.

Like the financial and automotive industries, the insurance industry is in dire need of new regulation, visionary leadership, and transformational change.