Tag Archive for: insurance

Insurance Companies Limit Exposure In Florida, California. Will Texas Be Next?

An article in the New York Times on July 14 listed insurance companies limiting coverage or pulling out of disaster prone states.

  • Farmers said it will limit coverage in Florida
  • Eight smaller insurers have gone bankrupt in Florida in the last two years.
  • State Farm and Allstate have stopped selling policies in California, and Farmers has limited them there.

Separately, a Washington Post investigation found that some Florida policyholders had their claims cut by more than 80 percent after Hurricane Ian last year. The headline screams, “Insurers slashed Hurricane Ian payouts far below damage estimates…”

Risks Vs. Rewards of Living Near Water

I’ve written before about how the love of living near water can outweigh the fear of consequences that sometimes accompanies it.

If you google “benefits of living near water,” you will quickly find 1.9 billion results. Many of them are from residential developers near rivers, lakes, streams and seashores. They make health and emotional claims such as:

  • Lowers stress and anxiety
  • Increases in well-being and happiness
  • Lowers heart and breathing rates
  • Healthier lifestyle.

Now google “disadvantages of living near water.” You get half that number of results. They tend to cluster around:

  • Flood damage
  • Pollution
  • Erosion
  • Increased maintenance and insurance costs

For Most People, Rewards Generally Outweigh Risks

It’s not that people don’t recognize the disadvantages of living near water. It’s just that most enjoy the benefits more. AND they figure that insurance companies will make them whole should disaster strike.

But now, at least in some states, insurance companies seem to be caught in a squeeze between shareholders and regulators. And they’re making some tough calls that will force policy holders to re-evaluate whether the rewards of living near water are worth the risks.

As I scrolled through my library of almost 50,000 flood-related images last week, I wondered how long it might be before Texans experienced the same insurance problems now facing Florida and California residents.

Our love of water, buoyed by the courageous, optimistic spirit of Texans, leads many to take risks that I personally would not take.

Bolivar Peninsula Denser than Before Ike

In that regard, I remember the Bolivar Peninsula after Hurricane Ike. Ike’s storm surge brought total destruction to 30,000 homes in 2008. See the images below these first three satellite images. The satellite images show the same area before, immediately after, and 15 years later on the Bolivar.

Google Earth image showing residential area on Bolivar Peninsula the week before Ike struck in September 2008. Note large, open undeveloped areas.
Same area day after Ike. Total destruction. See ground-level shots below.
Bolivar Peninsula today

The Bolivar today has denser development than it did before Ike. Such is our collective love of water…that we quickly forget or overlook the destruction that happened just 15 years ago. Here’s what it looked like on the ground.

Destruction on Bolivar Peninsula After Hurricane Ike

This was an excellent opportunity to buy people out and turn this area into a national seashore. But that was politically unpalatable.
Power not only went down. The entire power infrastructure was taken out.
One of the few homes left standing.

We’ve spent the 15 years since Ike studying proposals to build an Ike Dike that could protect such properties. But in June 2023, the Houston Chronicle reported that it could be 2040 before construction completion of the $34 billion project.

Until then, it’s “swim at your own risk.”

Posted by Bob Rehak on 7/18/2023

2149 Days since Hurricane Harvey

Insurance Company to Sand Miner: Defend Yourself, We’re Not Responsible for Pollution

On 4/9/2020, Everest National Insurance company filed a lawsuit in US District Court for the Southern District of Texas, against one of its policy holders, Megasand, Inc. Everest wants a declaratory judgment stating that it is not responsible for the defense of its client, nor for any settlements or judgments that may arise from underlying cases that it specified (see below).

Courthouse News Service Alert

Yesterday, a local lawyer, Steven Selbe, noticed an alert from the Courthouse News Service (CNS) and, in turn, alerted me.

CNS said, “Megasand Enterprises is a defendant in several Harris County Court lawsuits in which residents claim their homes flooded in August 2017 because Megasand and other gravel mining companies negligently dumped sediment into Spring Creek and the San Jacinto River, reducing the waterways’ capacity to absorb flooding caused by Hurricane Harvey. Plaintiff seeks a declaration it does not have to defend nor indemnify Megasand against the litigation.”

Underlying Cases

After Hurricane Harvey, hundreds of residents in the upper San Jacinto River watershed banded together in several lawsuits against sand mines. The suits allege that mines located near the river and its tributaries discharged silt and sediment without authorization. That, they claim, reduced the ability of the river and Lake Houston to handle floodwaters, which in turn contributed to the flooding of their homes and businesses. The first lawsuit alleges nuisance, negligent conduct, gross negligence, and violation of the Texas Water Code Section 26.121. It names Megasand as a defendant. Several subsequent lawsuits were consolidated with this one.

Another suit filed this February represents 437 plaintiffs and 55 defendants, also including Megasand. This suit alleges negligence and negligence per se. Negligence per se is the unexcused violation of a statute. The suit alleges, in part, that defendants owed a duty to Plaintiffs to implement procedures to reduce the discharge of sediment, but did not.

Impact if Everest is Successful

This is not good for the folks who actually want to recover money, but may put some sand mines out of business. The insurance company says that Megasand’s policy does not cover pollution. Therefore, Everest wants to stop paying for Megasand’s defense. If the judge agrees, Everest would not have to pay for any settlements, judgements, or legal fees.

Says Selbe, “The good thing if you are an insured being defended is that your defense fees and costs are usually paid by the insurance company and often the insurance company eventually pays to settle. In this case, the insurance company wants out of the box altogether. That’s bad for Megasand. It will have to pay to fight this lawsuit and if it loses, will have to pay to defend the flood cases and any judgments or settlements.”

Mouth bar of the San Jacinto West Fork. Photo taken on 9/14/2017, two weeks after Harvey. More than 4000 structures flooded behind this blockage.

Even though Harris County courts are trying the underlying lawsuits, Everest filed its suit against Megasand in federal court. The insurance company is incorporated in Delaware and the sand company in Texas.

Reading Everest’s policy agreement with Megasand may cause other insurers and insureds to review their own policies. If sand miners cannot get insurance because of their current business practices, it may force them to modify their practices to reduce risk.

Basis for Everest Claims

The Everest suit claims, in part:

  • “Our right and duty to defend end when we have used up the applicable limit of insurance…”
  • The insurance does not apply to…property damage that is “expected“ from the standpoint of the insured.
  • The insurance also does not apply to “pollution” and the “processing or treatment of waste.”

Stepen O. Venable of Walker Wilcox Matousek LLP represents Everest National Insurance Company.

It’s not clear what triggered the Everest suit at this time. Plaintiffs filed the first of the underlying suits in 2018.

Editorial Opinion

Dozens of posts on this blog have documented discharges from sand mines. I have so many aerial photographs that I have personally concluded that pollution is part of most mines’ normal business practices. If caught, mines simply pay a slap-on-the-wrist fine.

Since mines were forced to register in 2011, the average fine has been only $800.

In essence, that makes Texas a “pay-to-pollute” state for sand miners.

If Everest is successful, the “expected” part of their claim may form a precedent that transforms the mining industry in this state. Especially if the Attorney General successfully prosecutes the Triple PG mine in Porter. The Attorney General alleges serial pollution and seeks fines that could exceed a million dollars. (Note: The underlying suits in this Megasand case also name Triple PG as a co-defendant.)

Financial risk may produce changes in business practices that Austin has not been willing to legislate.

Posted by Bob Rehak on 4/11/2020 with thanks to Steven Selbe

956 Days after Hurricane Harvey

The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.

City and MoCo Offer NFIP Flood Claims Workshop with FEMA

Houston Council Member Dave Martin announced that the City of Houston and Montgomery County will host a flood claims workshop from 6:00 p.m. to 7:30 p.m. on Wednesday, June 19, 2019.

  • Kingwood Community Center
  • 4102 Rustic Woods
  • Kingwood, Texas 77345

This event is for anyone (resident or business owner) who has: a) suffered flood damages, b) has flood insurance through the National Flood Insurance Program (NFIP) and c) has questions about the policy claims process. FEMA representatives will be available to provide resources and answer questions. It does not matter what event caused the flood damage. Although the time has passed for submitting a Harvey claim, some people may still be struggling with the process. If they are protesting a settlement, they might benefit from this event.

Melissa Sturgis #4. Treasured antiques 3 generations back from New England are on this curb. Furniture and collectibles from 8 years overseas in Malaysia, London and Russia.
Melissa Sturgis’ home after Harvey
Flooded home in Elm Grove after May 7th rain.

For more information please contact the District E Office at DistrictE@houstontx.gov or Diane Cooper, Montgomery County Floodplain Administrator at Diane.Cooper@mctx.org.

Posted by Bob Rehak on 6/7/19

647 Days since Hurricane Harvey and One Month since May 7th

How to Prepare for a Hurricane

By Diane Cooper, Kingwood resident with 20+ years’ experience in weather and river forecasting for the National Weather Service

It only takes one storm to cause serious damage to a region, which can occur in any year, even a below normal season. So, whether the forecast is for an above, below or normal hurricane season, you should prepare. Remember! Hurricane season is only six weeks away.

Prepare to Be Hurricane Strong

Now is a good time to prepare or update your Disaster Readiness Kits. Remember: “Shelter from wind; Flee from water.” Therefore, you need to create two kits. First, prepare a disaster readiness kit for sheltering in place. Second, prepare a “grab kit” in case you need to evacuate.

For what to include in a readiness kit, see my blog post.

For your grab kit, consider these suggestions:

  • FIRST, you need an evacuation plan.
  • Know your evacuation zone and your evacuation routes.
  • Identify what you can quickly grab that will support you on the road for several days.
  • Determine a route to a destination far enough inland that you will be safe from wind and flooding.
  • If you evacuate, take copies of insurance policies and other important documents or have them stored online, so that you can access them remotely.
  • Share your evacuation plans with friends and family.
  • Consider that your drive time will likely be longer than normal because of heavy traffic.
  • Prepare to be gone for several days.
Check Insurance Policies

NOW is a good time to review your insurance policy to ensure you have adequate coverage for you home, business and personal property. Make sure that your insurance policy covers rebuild costs and not simply your “tax-assessed value.”

Consider flood insurance. Our community leaders are working hard on flood mitigation. However, it will take time to fund and implement all mitigation measures. Until then, flood insurance can minimize your personal risk as well as risk to your business. Sadly, Harvey reminded us that inland/freshwater flooding can cause significant damages.

A standard home or renter’s insurance policy does NOT cover flood-related damages. If you already have flood insurance, make sure it covers personal property as well as your structure. (Note: if you had to purchase flood insurance to obtain a loan, your policy may not include the separate contents coverage. You can add coverage by contacting your insurance agent.) If you rent, you can take out a flood insurance policy for your personal property.

If you own a business, also consider business interruption insurance. It’s fairly inexpensive and can be a lifesaver. It’s not part of most business policies but can easily be added – inquire with your insurance agent. Specify that it covers disruptions due to extended loss of power. During Hurricane Ike, Kingwood lost power for approximately two weeks. Losing income for that long can severely harm any business.

Strengthen your Home

You can also do some simple things around your home, such as trim dead or weakened tree limbs, replace loose shingles, clean out gutters, and ensure they are securely attached. You can add hurricane clips to reinforce your roof. Also add braces to your garage door railings and cross braces to your garage door. Flash.org has more tips on how to strengthen your home and be HurricaneStrong.

Don’t Wait to Prepare

While I pray we will not experience another tropical system this year, the reality is that each year we have a risk of at least one. Thus, we need to be prepared. Take appropriate actions depending on the risk of each storm. Start to prepare now.

Posted April 12, 2018, 226 Days Since Hurricane Harvey