FEMA is an insurance company

imgresThis is something that has been on my mind forever but because we were one of the many buildings, people, businesses etc whose fate was in the hands of FEMA to pay claims I never wrote about it.  Then this week there was an article in the NYTimes of the painful attempts of many who did not receive their full claims and have until 9/15 before the case is closed.

So here is our story.  We had insurance for our building and for many reasons we ended up going with an insurance company based in Florida for our building instead of Chubb.  Chubb is not for everyone.  They are expensive but not using them was our first mistake.  An insurance broker that our building management agency relied on gave us the option of going with a company called American Bankers.  I knew nothing of this company until after Sandy when I finally found it on the web.  There was nobody to talk to and it appeared to be a FEMA backed insurance company.

I am calling the insurance brokers daily if not twice a day post-Sandy.  They were overwhelmed to say the least.  Weeks and week of headaches, heartache and stress is an understatement.  People from the insurance agency came out to assess the property damage weeks after.  They stayed maybe 45 minutes and left.  We have zero idea when we will be reimbursed for the damage.  Don’t we have insurance for this?

Our building was not in a flood zone until after Sandy.  I have the maps that say that we are right next to the flood zone but not in it.  That changed after Sandy. We finally have a meeting with everyone in the building including the insurance broker and our managing agency.  Here is what we find out.  We have a FEMA backed policy. I went crazy.  If I had known that I would not have called the insurance broker daily for a month and btw I tortured them.  If they had been honest from the onset of what we had purchased I would have known immediately we were fucked.   Here is what that means.  Each month we have been paying American Bankers for insurance but who we are really paying is FEMA.  FEMA is an insurance agency.

Essentially we pay FEMA for these insurance policies that they guarantee through insurance companies (questionable) and when there needs to be payment back to the policy holder based on something like Sandy or Katrina they pay back (if you are lucky) less than 50% of what you need.  Now you can fight them which takes serious time, effort and money because they do not want to pay you anymore than that.  What they wanted, what they asked for, how they delayed it was atrocious.  We jumped through all the hoops several times to get what we were owed.  We never got fully paid back.  We are lucky because our building can afford to fix everything and just be pissed at the insurance agency. It won’t kill us.  For others who rely on that policy who can’t afford the extra it takes to actually put their homes back together is devastating.

I told our Senators about this.  They had no idea, truly.  Essentially FEMA is paid through insurance companies for policies held by them.  Then once they need to pay out they only pay out 25-40 cents on the dollar.  To put it bluntly our government takes money monthly from their people to insure them and then screws them by not completely covering them.  It makes zero sense.

Granted there are people who live in areas that are continually flooded so perhaps policies should change.  It should be like car insurance.  You can not drive out of the lot without insurance.  If you want to buy a piece of property that is in a flood zone then let the private insurance companies set policies (let capitalism work) and people will decide whether they can afford those policies or not and in turn make a decision if that piece of property (home) is worth acquiring.

There are plenty of families whose lives are still disrupted by Katrina (10 years later) and Sandy.  FEMA will never pay them full dollar for what their homes were insured for and they do not have the extra cash to rebuild.   I’ve never seen a reporter dig into this.  Someone should.  The next disaster will create upheaval in the community and peoples lives again and again but there should be some solace if you know that your insurance company has your back.  FEMA does not.