Insuring Themselves To Death.

“I lost everything on the bottom floor. We had to throw everything away. All the kids’ stuff, all the appliances, all the electrical stuff. Everything. And I had to replace every bit of it out of pocket, because none of it was covered for lack of a $22 addition to my insurance policy.”

story by Dan Oshinsky / photos by Dan Oshinsky
published August 25, 2010

Twenty dollars could have saved Charlie Green thousands.

Green doesn’t have much of an excuse. He was an insurance agent in Pascagoula, Miss., for nearly a decade. Then he started his own, self-titled real estate agency in the 1970s, and in the early 1990s, he founded his own construction company, Green Way Builders. He has about 40 properties along the coast that he rents. He’s spent his life working with homes along the Gulf Coast, and he’s lived through both hurricanes Camille and Katrina. He’s the seventh of nine generations of Greens who’ve lived in Jackson County, and his family knows the history of storms that have hit the Gulf. If anyone was going to get his home insurance policy right, it was going to be Green.

But even Charlie Green didn’t.

“I wish I’d known,” he says. “I should have known.”

Green had several forms of insurance on the home, he says. He had a homeowner’s policy, which covers fire and theft. He had insurance covering both wind and hail. He also had complete flood insurance — at least he thought he did — covering both building and contents.

There isn’t a single policy anymore that covers both types of flood insurance. In case of flood, building coverage pays for the stucture itself, as well as the foundation and items like a water heater or refrigerator. But other elements are not included in building coverage. It covers homeowners for built-in dishwashers but not portable ones. Stoves are included, but washing machines are not.

To get full coverage on everything inside a property, homeowners also need contents coverage, and Green didn’t have it. His insurance agent had called over the previous years to try to sell him on things he didn’t need, like nursing home insurance, but he says his agent had never once mentioned the flood-related hole in his insurance coverage.

When Katrina hit, Green found out how big the hole was.

“I lost everything on the bottom floor,” he says. “We had to throw everything away. All the kids’ stuff, all the appliances, all the electrical stuff. Everything. And I had to replace every bit of it out of pocket, because none of it was covered for lack of a $22 addition to my policy.”

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A common sight on the Coast: A home built on stilts to meet flood code restrictions. (At top) Charlie Green in his Pascagoula office. (Above) A common sight on the coast: A home high on stilts to meet the new flood code.

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The first time I heard the phrase was from Bill Stallworth, a Biloxi city councilman. He serves in Ward 2, the strip of the city that is to Biloxi what the Lower Ninth Ward is to New Orleans. It was the hardest hit during Katrina, and it’s also the area that, financially, is still struggling to build back.

So when it comes to the insurance companies — or any real estate suitor looking to buy land for cheap in Biloxi — Stallworth says his constituents have a phrase:

Make me whole.

These locals aren’t looking for a payday, Stallworth assures me. But if they lost something, and they had insurance on it, they’d like to be reimbursed in full.

Still, five years after Katrina, the refrain across the Gulf Coast is that the insurance companies have not been fair to locals. The Deepwater Horizon disaster has hit the tourism and seafood industries especially hard, and the economy has hurt builders and buyers, but no single class, race or industry has been unaffected by the decisions of the insurance companies.

I put the subject to two current mayors on the Gulf Coast, as well as three retired mayors of Biloxi, and all five men suggested that the single greatest obstacle holding back the coast is insurance costs.

“I lost everything on the bottom floor. We had to throw everything away. All the kids’ stuff, all the appliances, all the electrical stuff. Everything. And I had to replace every bit of it out of pocket, because none of it was covered for lack of a $22 addition to my policy.”

The insurance industry’s post-Katrina influence came up so often during interviews — and without my prompting — that I stopped asking about it, and instead just waited for the interviewee to steer the conversation in that direction. They always do. The head of the Biloxi school system told me that his enrollment is down because parents have moved to areas where insurance costs are affordable. The president of the local branch of the NAACP wanted to speak on the subject, and so did an Irish-born Catholic priest and a Biloxi-born bishop. In interviews, architects, city councilmen, restaurant owners, auto mechanics, fishermen, artists, librarians and retirees have all pointed to insurance costs as the no. 1 reason why the coast has not built back in full.

“It’s just outrageous,” says Biloxi mayor A.J. Holloway. Pass Christian mayor Chipper McDermott put it another way: “Insurance is killing everybody. That’s why you haven’t seen the coast jump back like it did in the old days.”

Across the coast, residents say their insurance costs have risen anywhere from several dozen to several hundred percent since the storm.

The only coast-based business, it seems, that’s been done right by the insurance companies is Waffle House. There are dozens of Waffle Houses that dot both sides of Highway 90, the road that runs right up against Mississippi’s coastline. Bob Bennett, owner of the Edgewater Inn and the Waffle House that sits on his property, told me that the restaurant chain purchased excellent insurance before Katrina, and payouts from those policies meant that it cost Waffle House just pennies to rebuild their stores in full.

On the stretch of Highway 90 from Biloxi to Gulfport, there used to be dozens of restaurants. Now, plots of land sit vacant, the Scrabble tiles of the Waffle Houses illuminating nearby land that’s since become too expensive to build on.

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There was a point, Charlie Green remembers, when homeowner’s policies were simpler, and when they actually covered the home and everything inside. The problem is that many of these homeowners are unaware that their policies no longer offer total coverage. A survey released Tuesday by MetLife Auto & Home found that 71 percent of homeowners do not actually know how much an insurance company would pay out in case of a natural disaster.

Today’s insurance policies are broken up into several segments:

  • The basic homeowner’s policy is still covered by any number of insurance agents on the coast or around the country.
  • Flood insurance — for both building and contents — is covered through the National Flood Insurance Program, which is administered by FEMA. Unlike other insurance policies, the costs are set by the federal government, not by insurance companies or agents. But a policy must still be purchased through a licensed agent.
  • Wind insurance in the southernmost counties is often provided through the Mississippi Windstorm Underwriting Association. Rates vary depending on which of the four designated zones a home is located in. Zone A covers beachfront property, Zone B covers most of the land south of Interstate 10, and so on moving north. The windpool, as it’s called, has lowered their rates recently to reduce some of the insurance burden on homeowners.

New insurance regulations have also been added after Katrina to ensure that holes in coverage are closed. If a homeowner does not have complete coverage, the state will now send the homeowner a certified letter explaining the gap.

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Many insurance companies offer “safe driver” discounts for those who are less likely to get into accidents. Less risky drivers pay less. But building codes on the coast are up to their highest standards ever, which makes these homes less likely to be destroyed by a hurricane. So if there’s less risk of property destruction, why aren’t home insurance costs actually lower than they were before Katrina?

The answer: The insurance companies say that those post-Katrina building codes are still not strong enough.

The Institute for Business and Home Safety — an insurance industry-funded group that features executives from Allstate, Farmers Insurance, MetLife, Nationwide and State Farm on its board of directors — released a report last week stating the building codes in Louisiana were up to par, but standards in Alabama and Mississippi were inadequate.

“Quite frankly, I wish they’d have a catastrophe to put every one of these sons of bitches out of business. That’s how I feel about it.”

The same report, however, said that the three coastal counties in Mississippi — Jackson, Hancock and Harrison — had building codes that were up to their standards. It’s the inland counties of Mississippi that insurance companies are worried about. Many homes in those counties suffered damages in Katrina due to wind, but none were hit with the flooding that caused the majority of the destruction along the coast.

Green says he just cannot understand why he’s paying so much for insurance, especially if the homes he owns — and the homes he’s building — are up to code. Personally, he says, he thinks the insurance companies have been “treating people like they’re dog dookie.”

“Quite frankly,” he says, “I wish they’d have a catastrophe to put every one of these sons of bitches out of business. That’s how I feel about it.” ❑