I'm writing this as a follow up to my earlier post about hurricane Bertha.  It got me thinking.  If we ever get another season with a few major storms like Katrina and Andrew making landfall in the US, who will end up footing the bill for all the damage? The answer may surprise you.

Of course the insurance companies get to pay for their share of losses.  But insurance companies have become pretty smart.  They don't like going bankrupt just because of one storm.  So the smart ones have gone out and purchased catastrophe policies to cover their losses above $1 or $2 billion.

But what about for FLOOD?  Every good Realtor, lender and insurance agent knows that homeowner's policies won't cover for FLOOD.

Well, when the NFIP runs out of money, it borrows money from the federal government.  So do you know what just happened earlier this year?  FEMA (parent of NFIP) requested that its flood-related debts be forgiven and the feds granted the request.

Whoa!  Stop the press!  Did I hear that right?

So who do you think ends up footing the bill for the excess FLOOD LOSSES: Every taxpayer in the nation.  That's right - even if you don't live anywhere near the coast - you get to pay for it through your taxes.

You see, if we don't come up with some sort of national catastrophic insurance plan, the precedent has been set.  We will all be made to act as the defacto stop-gap for catastrophic flood losses.

Just thought I'd share.