Flood Insurance

Forty percent of New Orleans homeowners had flood insurance. In a flood prone region where the home buyer's ability to obtain a mortgage is tied to the purchase of federal flood insurance, how can this number be so low? Answer: a large number of the houses in the city are not mortgaged to young homeowners but owned outright by absentee landlords and occupied by renters. Property owners in New Orleans are at liberty to decline flood insurance if their property is no longer under mortgage. Of course, the landlord always runs the risk of losing a building to a disaster like Katrina but the risk of losing one's cash cow slum is not the same as the risk of losing one's home. Besides, that risk always came with the possibility of a federal bailout or, at the very least, a chance to lay blame at the feet of "heartless insurance companies." Failing that, the enterprising landlord can always burn his way out and blame it on the looters.

Note: Far be it for me to rush to the aid of the beleaguered insurance industry. This Mississippi lawsuit, I think, does hold water (pun perhaps intended) since the property owners were told not to buy flood insurance due to the fact that they were not in a "flood zone." That seems a bit of an untenable premise at this point.