Avoiding a Slow Painful Death of the American Dream

by Ana Maria

As I think of the American Dream, what comes to mind mostly is owning my own home. For some their home would be a ranch style home on ¼ of an acre. Others want more yard or a big home, in the country or ’burbs or city, in the mountains or at the bottom of ‘em, near a lake, on the river, near an ocean. Talking about owning a home will bring up plenty of topics to discuss from whose the best homebuilder in the area to the best appliances to the school system that kids will attend to carpet samples. None of it particularly sexy, but all of it enveloped in a belief so wedded to our most deeply held beliefs as Americans that we get almost giddy when we hear about someone buying their first home. Owning a home is the quintessential attainment of a very real piece of the American Dream.

Last week’s decision from the Federal 5th Circuit Court of Appeals allowing insurance companies to make good on the finely printed clause was a horrendous blow to home and business owners whose properties were destroyed when Katrina’s nasty winds blew away at over 135 miles per hour for hours on end. The insurance companies made their argument that their little known clause exempted them from being legally responsible for wind damage if water also came on the property. The federal appeals court bought it, and in so doing helped to hasten a slow painful death of this very central part of the American Dream.

The “gotcha” clause, as I call it, is the “concurrent clause” which essentially states that if a home or business is damaged by wind AND by water, the insurance company doesn’t have to pay a cent for the damage that wind causes. Surely to goodness, insurance companies didn’t emphasize this “gotcha” clause when training its agents. Clearly, emphasizing the “gotcha” clause was not a central part of the routine pitch to clients. After all, how many policies would these esteemed companies have sold if their agents had been directed to state flat out to prospective customers something along the following.

“I want you to understand fully that I will gladly sell you homeowner/ business owner insurance which includes wind damage from a hurricane. Now, this clause right here—see its in tiny letters, yeah this clause basically states that if a drop of water comes on the property, we do not pay you a penny. We’ll pay if the hurricane is only wind AND you can prove that no water touched the property.”

Around here, any one of us from any ethnic or racial background whether we’re young or old, rich or poor, well educated or not would have come back with something like this.

“What are you talking about?! There is no such thing as a hurricane without water. A hurricane without water is called a tornado, fool. What’s this nonsense that if there is damage by both wind and water, you are not going to pay for the damages caused by wind. What kind of idiot do you think I am, coming up in here in my home trying to take my money like that?! You’re the idiot.

Why don’t you go on and get out of here. That’s right. Get out of my house and go find you a real job, a respectable job. Quit this snake oil sales job you got. And don’t let me see you bothering my neighbors or my family. I’ll get after you. I’ll run you off. Now, go on and get out!”

Yeah, we don’t cotton that kind of snake oil sales garbage. You know what? Neither does the rest of the country.

But that is what the insurance industry has been allowed to get away with. They have sold policies throughout the Southeast from Texas to Florida up the east coast telling home and business owners that when it comes to wind damage, they are covered and that as long as they get flood insurance, not to worry. As has been documented in plenty of news stories and in many of my entries, two major problems come with that.

First, flood insurance is not always available to folks. My neighborhood is not in a flood zone. A business owner around the corner asked about flood insurance and was told he couldn’t get it because . . . he is not in a flood zone. Can’t buy what won’t be sold to you.

Secondly—and this is really the big bugaboo, the federal government contracted with the private insurance industry to adjudicate the flood claims to determine the extent of the damage that flooding caused. These same private insurance claims adjusters also determine the extent to which their own private companies, companies that are paying their salaries, are financially responsible for the damages that wind caused. This scenario set up a conflict of interest, the perfect storm through which to transfer wind damage costs to the federal flood insurance program and stiff the customers who didn’t have flood insurance because, well, they weren’t in a flood zone.

This conflict of interest is the basis for the allegation that the private insurance companies defrauded the federal government taxpayers through deliberately attributing its own wind damage costs to water/flood damage. Couple this with the tiny printed “gotcha” clause that lets insurance companies finagle out of paying us the money for which we have faithfully paid our premiums and we are S-O-L on our financial security plan.

Remember, like all policies, flood insurance also has limits. So when the money that should have paid for the wind damages remains in our insurance company’s bank account, we as home and business owners are stuck without the money we thought we would have when a storm hits.

So far, the insurance companies have a “gotcha” card which the federal appeals court validated unfortunately AND they get to determine how much damage to wiggle out of by attributing more damage to water than may have been attributed by someone whose loyalty was to the flood policy alone. Next, we have insurance companies canceling insurance policies throughout the country.

Even after having pawned off their wind damage costs to the federal flood insurance policy, rates are climbing.

"It's horrible. Rates have gone through the ceiling," said Fort Morgan builder Greg Miller.

Miller said he paid $22,000 in coverage on four condo units until Katrina struck two years ago. He now pays $108,000 on his units for less coverage: "That's all we could get," he said.

Miller is in Alabama. Here's a nice headline from that state.

Ala. Coast Pushes for Insurance Relief


Here’s another headline from a state that Katrina didn’t hit.

South Carolina State Insurance director loses insurance

The article reported, "State Director Richardson lost his homeowner’s insurance when the company cancelled the policy."
"I guess it just proves nobody's immune. If I'm not immune, then nobody is," Richardson said.

Not exactly a laughing matter, but does state the obvious. If the rich and powerful are unprotected, neither are those of us who are neither rich nor powerful. Remember even powerful people in positions of great political power like U.S. Senator (R-MS)Trent Lott and Congressman Gene Taylor (D-MS) had to hire a lawyer—Dickie Scruggs—and sue State Farm before receiving a penny on their insurance policies.

That is the very point of Congressman Taylor’s proposal to include wind coverage with the federal flood insurance policy. The insurance companies are not paying on their wind coverage policies, because they have been allowed to insert its “gotcha” clause in our policies. The federal appeals court has validated the industry’s “gotcha” card. The insurance industry may have potentially pawned off on the federal government billions of dollars of wind damage claims. So we are left flapping in the wind of financial ruin when we thought we were being financially prudent in purchasing our home owner's policies-. Plus it's a must when we get a home loan.

The 5th Circuit Court of Appeals just blew to the winds our ability to have and to hold on to our part of the American Dream.

Part of the American Dream that remains in our hands, though, is telling our elected officials to fix this. In our hands rests the ability to move forward in a new direction that places the financial security of our families and businesses in ONE policy for both wind and water. This is how we ensure that this tremendous tragedy isn’t repeated anywhere else.

Participating in political hell raising is good for the soul and great for making our political dreams a reality. So, let’s get to calling and emailing our congressional representatives to support H.R. 3121, which creates ONE policy for both wind and water. Soon, the full House of Representatives is going to vote on this bill, and our congressional representatives need to know that we support it.

After all, this remains the United States of America. We remain Americans. We dream of a better tomorrow. It's in our blood to dream of making things better. We can actively participate in making those dreams come true. This is how we avoid a slow painful death to what is central to the American Dream. We are a nation of doers. We take action. It's as simple as letting your fingers do the walking. This is our way, the American Way.

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