Homes in parts of the U.S. are "essentially uninsurable" due to rising climate change risks
Donald Trump likes to toss around eye-watering sums when estimating the value of his Florida private club Mar-a-Lago — often in the same sentence.
“The house is worth a billion, a billion and a half, $750m,” Mr Trump said in meandering remarks outside his civil fraud trial in New York on Tuesday.
It was “the most expensive house, probably, in the world,” he added.
Mar-A-Lago Has A Flood Insurance Policy Through The Federal Government.
Donald Trump's Florida estate is among the flood-prone properties covered by the controversial program.
The property has a flood insurance policy through the National Flood Insurance Program, a Federal Emergency Management Agency spokesperson told HuffPost. The program provides affordable insurance in flood-prone zones where private insurers have traditionally refused to insure properties because they’re so vulnerable.
The Mar-a-Lago club’s policy, which is insured to the Trump Organization and Donald J. Trump Revocable Trust, is not subsidized and is classified at a full-risk rate for the applicable flood zone, the FEMA spokesperson said.
A property covered at the “full-risk” rate means that its owner is paying a rate that reflects the full risk of flooding up to a certain coverage amount. Older properties can be “subsidized,” meaning their rates do not necessarily reflect the full risk for those properties. The 1968-era National Flood Insurance Program, or NFIP, offers a mix of rates.
The insurance program’s authorization was set to expire at the end of this month, but Trump signed legislation on Friday that temporarily extends it.
NFIP as a whole has been criticized for not charging enough to cover the expected costs of liabilities. It also consistently does not bring in enough money to pay out the properties it insures, and owes around $25 billion to the U.S. Treasury. Based on policies that went into effect on Aug. 31, 2016, the program is projected to have a one-year shortfall of $1.4 billion, according to a Congressional Budget Office report published this month.
Some critics say the program benefits affluent people who live on beachfront property, essentially allowing them to live in places that are at a high risk of being damaged.
“If [NFIP] was a regular insurance company, they would have been in receivership,” Burl Daniel, an insurance expert witness from Texas, told HuffPost. “But it’s a political football because of the people who live on the coast.”
“The program was already in trouble” before Hurricanes Harvey and Irma began approaching the U.S., said Karen O’Neill, an associate professor at Rutgers University who studies how policies about land and water affect government power.
“It became super in trouble after Katrina, and Sandy was another blow,” O’Neill said.
Mar-a-Lago, Trump International Golf Club in Palm Beach and Trump National Golf Club in Jupiter are all closed in advance of Irma, a Trump Organization spokesperson said. (She did not respond to the question about insurance.) Irma, one of the largest storms ever recorded, is expected to hit Florida this weekend.
“It would be outrageous for somebody who is denying the reality of climate, who is undercutting our ability to minimize the effects, to then turn around and be a recipient of federal largess.”
Mar-a-Lago has weathered hurricanes before. According to an Associated Press investigation, Trump claimed that he received a $17 million insurance payout for the estate in 2005 due to damage from a series of storms, but said he pocketed some of the money instead of using it to rebuild. Trump once boasted in a deposition that he had a “very good insurance policy,” apparently in reference to private insurance. (The FEMA spokesperson declined to comment on whether Mar-a-Lago was also insured by NFIP at the time, as that is “not publicly available information.”)
Mar-a-Lago, which Trump bought for $10 million in 1985, could see its main buildings damaged by an 8-foot storm surge, according to the AP. Thirty years from now, the property could be under at least a foot of water for most of the year, according to a risk analysis prepared for the Guardian.
A group of Democratic lawmakers introduced a bill in June that specifically aimed to block Trump properties from receiving any federal subsidy for flood insurance coverage. The name of the bill ― the Prohibiting Aid for Recipients Ignoring Science, or Paris, Act ― riffs off the Paris climate accord, an agreement from which Trump withdrew that same month.
As FEMA noted, the NFIP policy for Mar-a-Lago isn’t explicitly subsidized. (HuffPost did not ask the agency about policy details for other Trump-owned properties in Florida.) But Democrats say the Paris Act, which is not expected to pass anytime soon, is about the larger principle.
“It would be outrageous for somebody who is denying the reality of climate, who is undercutting our ability to minimize the effects, to then turn around and be a recipient of federal largess,” said Rep. Earl Blumenauer (D-Ore.), who introduced the House bill.
Trump might think Mar-a-Lago is worth $1.8 billion, but in 2020, his own company said the Palm Beach appraiser was right. That year, the county valued Mar-a-Lago at $27 million.
https://www.huffpost.com/entry/mar-a-lago-has-a-flood-insurance-policy-through-the-federal-government_n_59b3cd79e4b0dfaafcf82e52
https://ca.finance.yahoo.com/news/trump-claims-mar-lago-worth-224047024.html
https://www.cbsnews.com/news/trump-mar-a-lago-1-8-billion-own-company-said-it-was-too-high/
An insurance company deciding not to renew coverage against risks like fires and flooding can instantly devalue a property.
First Street found that a Florida homeowner who is dropped by an insurer could see the property's value decline 19% to 40%. That's because the homeowner would need to obtain coverage from the state's insurer of last resort, Citizens Insurance Agency. Citizens' higher insurance rates would lower the value of the home, First Street noted.
Some homeowners in regions with a higher risk of climate disasters are taking things a step farther by foregoing disaster insurance altogether.
https://www.cbsnews.com/news/insurance-policy-california-florida-uninsurable-climate-change-first-street/
https://www.palmbeachpost.com/story/news/state/2023/06/27/home-flood-insurance-dropped/70351753007/
Why Is Homeowners Insurance In Florida Such A Disaster?
No other state has suffered more from storms and other difficulties.
“Florida is constantly in Mother Nature’s crosshairs,” says Don Griffin, who handles research for the American Property Casualty Insurance Association (APCIA). Perched between the steamy waters of the south Atlantic Ocean and the Caribbean Sea, six of the 10 costliest storms in our nation’s history have walloped the Sunshine State. And three of them occurred in just two years—2004 and 2005.
These storms seem to have a preference for the Florida peninsula, dating back to the Great Miami Hurricane of 1926, even before the World Meteorological Organization began to name them. It took the wind out of the sails of Florida’s first economic boom.
But then the state bounced back, and now more than three quarters of its 21.5 million residents live in areas near the two coastlines. Six of the top 15 metropolitan areas at risk for storm surge in the U.S.—Miami, Jacksonville, Tampa, Bradenton, Fort Myers and Naples—are all located in the eye of “storm surge,” wind-driven water strong enough to drive homes right off their foundations, according to CoreLogic, which rates potential property damage nationwide.
After the massive losses from the 2004 and 2005 hurricanes, insurance companies such as State Farm—the nation’s largest home insurer—notified Florida officials it was scaling back operations and it would stop offering property insurance to residents. Other major insurers followed suit.
https://www.forbes.com/advisor/homeowners-insurance/why-is-homeowners-insurance-in-florida-such-a-disaster/
Florida Insurance Crisis Explained: Why Multiple Insurers Are Leaving State
Farmers Insurance has become the latest insurance company to pull out of Florida, despite repeated efforts by Republican Gov. Ron DeSantis and the state legislature to shore up the volatile market.
On Tuesday Farmers informed the state that it is discontinuing new coverage of auto, home and umbrella policies, a move that will reportedly affect 100,000 policies.
https://www.newsweek.com/florida-insurance-crisis-explained-1812418
WHEN WILL FLORIDA BE COMPLETELY UNDERWATER?
A LOOK AT THE FUTURE OF SEA LEVEL RISE.
Property speculation is an approach to real estate investment where anticipated profits are based on predicted changes in local market conditions rather than physical improvements or rents. This makes property speculation a high risk, high reward endeavor, where proper- ties are often bought and sold at a rapid pace.
https://www.palmbeachpost.com/story/news/environment/2023/08/23/flooding-sea-level-oceans-rise-climate-change-emissions-noaa-predictions/70640635007/
President Donald Trump has called climate change a “hoax” and a very expensive “tax” on American businesses that make the United States less competitive. In June, he announced that it was in the best interest of the country to withdraw from the Paris climate accord drawing on several bogus arguments.
His administration has also axed several regulations issued by President Obama to limit greenhouse gas emissions and reduce the impacts of climate change. The latest to fall: a 2015 directive to federal agencies requiring them to account for sea-level rise and storms when making grants and building infrastructure.
The so-called federal flood risk management standard was still in the works, but the aim was to create design standards to guard against increased flood risks for new construction in flood-prone areas. Trump did away with it in his executive order on infrastructure on Tuesday.
Environmental groups say the standard would have helped mitigate the risk of costly and harmful damages from floods. Now, “taxpayer dollars will likely be wasted through investments in projects that could be washed away in the next storm,” said Rachel Cleetus, lead economist and climate policy manager at the Union of Concerned Scientists, in a statement. According to FEMA, floods led to $260 billion in damages between 1980 and 2013.
Of course, Trump himself is one such property owner who stands to lose a lot in future flood events. Mar-a-Lago is the crown jewel of his extensive real estate portfolio and his preferred location for carrying out many of his official presidential duties. But rising sea levels are causing more frequent and more damaging tidal floods on the Florida coast. And projections suggest that the risk to human lives and property from climate change-related flooding events in this region is only going to increase dramatically in the coming years.
The National and Oceanic Atmospheric Administration (NOAA) has put out a variety of different estimates of rising sea levels in Southern Florida. The more conservative finding suggests that they could jump anywhere from 3 feet by 2050 to 7 feet by 2100.
But in January, the agency put out new “extreme” sea level projections — its doomsday scenario, in other words. In this scenario, we’d see a 10- to 12-foot rise in sea level in the US by 2100, which would have dramatic consequences for places like Mar-a-Lago (see the photo above).
Of all US states, Florida faces the greatest risk from rising sea levels
So what would a 10-foot rise in sea levels mean for Florida? Here’s a satellite image of what that would look like. Large swaths of the state are submerged. Miami is entirely flooded, along with the rest of Southern Florida:
There is evidence that average sea levels are already steadily rising in Southern Florida. A 2016 paper found that in the past decade, the average rate of sea-level rise had tripled from 3 millimeters a year to 9 millimeters. And overall sea levels in Southern Florida had risen about 90 millimeters, or 3.5 inches, since 2006.
UNDERSTANDING SEA LEVEL RISE IN FLORIDA, 2040
https://media.rff.org/documents/FCO_Infographics.pdf
Florida is in the crosshairs of climate change. Rising seas, a population crowded along the coast, porous bedrock, and the relatively common occurrence of tropical storms put more real estate and people at risk from storm surges aggravated by sea level rise in Florida, than any other state by far.
Some 2.4 million people and 1.3 million homes, nearly half the risk nationwide, sit within 4 feet of the local high tide line. Sea level rise is more than doubling the risk of a storm surge at this level in South Florida by 2030. For the hundreds of thousands of Floridians holding 30-year mortgages, that date is not far off in the future.
The world’s oceans are already rising, thanks to global warming. Global average sea level has gone up about 8 inches since 1880. In South Florida, taxpayers are already paying the price for climate change as salt water pushes through porous bedrock into coastal drinking-water supplies, and rivers and canals choked by heavy rains have a harder time draining into the ocean. A recent Florida Atlantic University study estimated that just 6 more inches of sea level rise — very plausible within two decades — would cripple about half of South Florida’s flood control capacity.
https://sealevel.climatecentral.org/news/floria-and-the-rising-sea
Florida is undergoing an insurance crisis
When it comes to homeowners' insurance, Floridians are all too familiar with the term "crisis." In recent years, rates have skyrocketed, leaving many property owners scrambling to find affordable coverage. Many insurance companies are leaving the state entirely or staying and revoking policies, limiting coverage and raising premiums by double digits. The Florida homeowners insurance market is on the brink of a collapse. As thousands of homeowners are in the lurch, the situation is highly problematic, especially in the midst of the Atlantic hurricane season.
But what is behind this crisis? The Zebra investigated the reasons behind this meltdown and shares what Florida homeowners can do if their policy is cancelled.
Why are insurance companies leaving Florida?
Home insurance companies have always been wary of the Florida market due to the dangers of weather-related damage on a large scale. However, the current crisis is caused by several man-made factors that have all come to a head simultaneously.
Roofing scams and plentiful lawsuits
In recent years, Floridians have seen the cost of homeowners insurance increase while the availability of coverage has decreased. This is due, in part, to the state's history of high levels of litigation and fraudulent roof replacement schemes. Such scams follow a similar trend:
The contractor will offer a free inspection and claim to find damage, even if there is none.
They will then try to convince the homeowner to sign the form, allowing the contractor to file an insurance claim.
However, when the insurance company inspects the property, they will often find no damage
The contractor will then sue the insurance company without the homeowner's permission.
The insurance company has two choices: fight the legal battle or settle. In either case, the insurer has to pay up.
According to data from the Florida Office of Insurance Regulation, Florida sees a disproportionate number of homeowner lawsuits compared to other states. In fact, in 2019, nearly three-quarters of all such lawsuits filed across the country were in Florida! This has resulted in immense financial strain on resident consumers. The annual cost of a Florida home insurance policy is slated to skyrocket to $4,231 in 2022, nearly three times the US yearly average of $1,406.
Some insurance companies are pointing the finger at a 2017 state Supreme Court opinion for causing a recent increase in litigation. The opinion in question allowed attorneys to collect bigger fees when they won lawsuits against insurance companies, and some insurers believe this has created an incentive for more people to file suit.
https://www.thezebra.com/resources/home/florida-insurance-crisis/
Donald Trump Got $17 Million Insurance Payout for Damage Few Recall
Donald Trump said he received a $17 million insurance payment in 2005 for hurricane damage to Mar-a-Lago, his private club in Palm Beach, but The Associated Press found little evidence of such large-scale damage.
https://fortune.com/2016/10/24/donald-trump-hurricane-payout-mar-a-lago/
Trump took $17 million in insurance for damage that few remember
Trump received a $17 million insurance payment for hurricane damage to his private club Mar-a-Lago. Where did the money go?
Two years after a series of storms, the real estate tycoon said he didn’t know how much had been spent on repairs, but acknowledged he pocketed some of the money. He transferred funds into his personal accounts, saying that under the terms of his policy “you didn’t have to reinvest it.”
“Landscaping, roofing, walls, painting, leaks, artwork in the—you know, the great tapestries, tiles, Spanish tiles, the beach, the erosion,” he said of the storm damage. “It’s still not what it was.”
Trump’s description of extensive damage does not match the versions of Mar-a-Lago members and even Trump loyalists. In an interview about Mar-a-Lago’s history, Trump’s longtime former butler, Anthony Senecal, recalled no catastrophic damage. He said Hurricane Wilma, the last of a string of storms which barrelled through in 2004 and 2005, flattened trees behind the estate, but the house itself only lost some roof tiles.
“That house has never been seriously damaged,” said Senecal, discussing Mar-a-Lago’s luck with hurricanes. “I was there for all of them.”
Just over two weeks after Wilma, Trump hosted 370 guests at Mar-a-Lago for the wedding of his son Donald Jr. Wedding photographs by Getty Images showed the house, pools, cabanas and landscaping seemingly in good repair.
Valuations for Mar-a-Lago are subjective, but Forbes estimated the 110,000-square-foot property’s value at $150 million in its most recent appraisal of Trump’s net worth. Tim Frank, Palm Beach’s planning administrator at the time of the hurricanes, said $17 million in work would have required “dozens, maybe scores of workers.”
Palm Beach building department records showed no permits for construction on that scale after the storms. The only permits that appeared hurricane-related were $3,000 in repairs to storm-damaged outdoor lighting and the vacuuming of sand from the property’s beachfront pool. Likewise, records of the city’s Landmarks and Preservation Commission reflected no repair work conducted following the 2004 and 2005 hurricane seasons.
The $17 million Mar-a-Lago insurance payment surfaced during a 2007 deposition in Trump’s unsuccessful libel lawsuit against journalist Tim O’Brien, who Trump accused of underestimating his wealth. As part of the case, O’Brien’s attorneys were permitted to review Trump’s financial records, including some from the Mar-a-Lago Club. They asked Trump to quantify the damage and explain why he had pocketed money instead of spending it on repairs.
Trump said he could not remember which hurricane had damaged Mar-a-Lago or when it hit.
“We continue to spend the money because we continue to suffer the ravages of that hurricane,” Trump said.
The insurance adjustor who assessed the insurance claim, Hank Stein of VeriClaim Inc., said there had been damage to Trump’s golf course in West Palm Beach and damage to Mar-a-Lago’s roof and landscaping. Stein called his review “a thorough investigation” but could not remember details. Trump declined to provide the AP with records about the insurance claim or answer specific questions about damage at Mar-a-Lago.
Stein, who has since left VeriClaim for another firm, said he remembered water damage from rain after windows to an observation deck atop the mansion blew open. “I wish I could give you some more information on the breakdown,” he said.
Under local rules, major repairs would have required Trump to request a permit and pay permit fees. It is possible someone could perform such work without permits, avoiding as much as $450,000 in fees, but that would have likely been illegal.
The city’s former planning administrator said getting away with such extensive unpermitted work would have been unlikely. Frank cited both his own agency’s vigilance and wealthy Palm Beach residents’ habit of calling out each other’s code violations. Once, Trump’s neighbours hired lawyers to report suspicions that Trump improperly let guests sleep in poolside cabanas when they were at the club for a wedding.
“If there were $17 million dollars of damage, we sure as hell would have known about that,” said Frank. “I would have known if there was anything in the magnitude of $100,000.”
The Republican mayor of Palm Beach at the time—and Mar-a-Lago member—Jack McDonald, agreed: “I am unable to comprehend $17 million in reimbursable damage.”
Jane Day, the city’s former historical preservation consultant, also was mystified. “This is the first I’m hearing of it.”
Frank said the commission would have granted immediate approval to simple repairs, but Trump or his contractors would still have needed to file for permits.
“If they changed the doorknobs I was supposed to review it,” Frank said.
https://macleans.ca/politics/washington/trump-took-17-million-in-insurance-for-damage-that-few-remember/
FLORIDA'S SEA LEVEL IS RISING AND IT'S COSTING OVER $4 BILLION.
The sea level around Florida is up to 8 inches higher than it was in 1950.1 | 2 This increase is mostly due to ice melting into the ocean and, complicated by the porous limestone that the state sits on, it’s causing major issues. Many traditional methods to solve for sea level rise and flooding in Florida won’t work, because water can flow through the porous ground, up from below, and under sea walls. In Miami-Dade County, the groundwater levels in some places are not high enough relative to the rising sea levels, which has allowed saltwater to intrude into the drinking water and compromised sewage plants. There are already 120,000 properties at risk from frequent tidal flooding in Florida.3 The state is planning over $4 billion in sea level rise solutions, which include protecting sewage systems, raising roads, storm water improvements, and seawalls.
https://www.washingtonpost.com/climate-environment/2023/04/10/sea-level-rise-southern-us/
SEA LEVEL RISE IS SPEEDING UP
Is Mar-A-Lago Flordia's New Swampland Deal?
The sea level around Virginia Key, Florida, has risen by 8 inches since 1950. Its speed of rise has accelerated over the last ten years and it’s now rising by 1 inch every 3 years.2 Scientists know this because sea levels are measured every 6 minutes using equipment like satellites, floating buoys off the coast, and tidal gauges to accurately measure the local sea level as it accelerates and changes.4
https://sealevelrise.org/states/florida/
https://southeastfloridaclimatecompact.org/wp-content/uploads/2020/04/Sea-Level-Rise-Projection-Guidance-Report_FINAL_02212020.pdf
TWO MILLION BUYERS PAID THE PRICE FOR THEIR NAIVETÉ WHEN THE 1920S LAND BOOM COLLAPSED
Between the end of World War I and the collapse in 1927 of the region’s real estate market, a battalion of hustlers parceled out hunks of the Everglades to anyone with a down payment. Many middle class migrators saw their savings dissolve like sugar in water as home values in Florida’s profoundly overbuilt housing market tanked. Standout characters include Tampa developer D.P Davis, who in hours unloaded hundreds of lots without telling buyers their properties were underwater.
https://www.historynet.com/bubble-in-the-sun-review/
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