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Comment by hijinks | Hacker News Reader

till they find out what it now costs to insure a home in Florida if you want wind/flood added to your policy

Flood is done by the government at set rates. So there is no reason to avoid building in a flood zone. Heck, you might be able to make a profit building in flood zones with this insurance.

Profit how? You're out a house, which will be rebuilt and insurance premiums?

You're not paying the premium based on the actual risk, but instead some fixed amount. So if a flood does destroy your house you collect the insurance money to re-build at a cheaper cost than it should've been relative to the risk... kind of like insurance arbitrage. It's still an additional policy, but there's wiggle room to make the policy holder profit.

So instead of paying $100/month for insurance I might be paying $400/month, so $3600 per year in profit?

Seems minor?

Losing your house and possibly family members is a poor investment strategy. When you community is wiped up it can take years to rebuild it and it might not recovered entirely at all. You might have no good place to live since everyone is in the same boat in your area; your job might vanish if you were not remotely working (like retail or manufacturing); you might lose your savings before you eventually get some of it back, or might be unable to last that long.

It might be profitable to buy up property from people who are financially destitute and willing to sell at any price and then sell once everything is rebuilt, but that a long term investment. Also if you get multiple disasters at once (Florida was lucky to only be hit by 1 hurricane) you might wind up at the tail end of rebuilding like Puerto Rico and never be able to sell.

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