It's not that people don't want to save for retirement, it's because they can't afford to.
NEW YORK, Nov. 27 -- The Insurance Information Institute issued the following news release:
While no major hurricanes have hit any part of the U.S. since 2005, Superstorm Sandy proved that even lesser storms can cause widespread devastation. Hurricane season 2012 ends on November 30, marking seven straight years that Florida has been hurricane free. Sandy sent a reminder that the worst effects of a storm can be attributed to flooding, but it is a lesson frequently learned yet seldom retained, says the Insurance Information Institute (I.I.I.)
Damage estimates from Sandy range from $25 to $50 billion, with about half that amount covered by private insurance. The remainder of the insurance claims will be related to flood losses, yet only 14 percent of homeowners in the Northeast have flood insurance.
In Florida, there are five times more flood insurance policies compared to the combined flood policy counts for New York and New Jersey, which has a lot to do with the fact that Florida has five times as much coastline. Yet, when flood insurance is an option, rather than a requirement, policyholders tend to drop coverage absent frequent weather reminders. Most standard homeowners insurance policies do not cover flood damage. Florida homeowners are reminded of this through a statute requiring the following statement in the insurance policy printed no smaller than in 18-point bold type stating:
YOU MAY ALSO NEED TO CONSIDER THE PURCHASE OF FLOOD INSURANCE FROM THE NATIONAL FLOOD INSURANCE PROGRAM. WITHOUT THIS COVERAGE, YOU MAY HAVE UNCOVERED LOSSES.
While Florida's seven hurricane free years may have given some people reason to question the need for flood insurance, the I.I.I. warns that the state's risk of flooding remains high. Tropical Storm Debby, which struck Northern Florida in late June, was a Florida example of a tropical storm's power to generate devastating flooding. "Many people think they are not at risk because they live in a low-risk flood zone, but low risk is not the same as no risk," said Lynne McChristian, Florida representative for the I.I.I. "Nearly 20 percent of flood insurance claims come from low- to moderate risk areas."
The Wharton Center for Risk Management and Decision Processes did a study on how long homeowners keep flood insurance (http://opim.wharton.upenn.edu/risk/library/WRCib2011a_nfip_tenure.pdf). It showed the median tenure was two to four years. The same study said even people living in flood-prone areas have allowed flood policies to expire, primarily because they did not see the benefits of making an investment in flood protection. Additionally, there is limited enforcement to ensure flood policies are retained.
Seven consecutive years without a hurricane is the longest such streak for Florida in recorded history, with records going back to 1851. The last hurricane to make landfall in Florida was Hurricane Wilma in October 2005, striking the southwest Florida coastline as a Category 3 hurricane on the Saffir-Simpson Hurricane Wind Scale. Wilma is also the last major hurricane (Category 3 or higher) to strike the United States. That seven year streak is also a record.
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