Wednesday, August 30, 2017

 

Next for Texas: The Legal and Financial Disaster


The storm and the flooding were terrible. So is what is going to happen next. Consider the following:

-- Only about one out of every five homeowners affected by Harvey have flood insurance.
-- Up to 500,000 cars have been destroyed
-- The financial loss is going to overwhelming; some are calling it the most expensive weather event in American history. 

So, an awful lot of people are going to have lost their car, their house, or both. There are four possible outcomes for those people and their recovery and rehabilitation or replacement of key property:

1) Their insurers will pay for it.
2) The government will pay for it.
3) They will pay for it.
4) No one will pay for it.

Let's consider each in turn.

1) The insurers will pay for it.

For some people, this will be true. They are among the 20% of homeowners in that area who have flood insurance. For everyone else, though, it will be a difficult time. And Texas just passed a new law that favors insurers over claimants.

2) The government will pay for it.

For some people-- or, more likely, businesses-- the government will bail them out, despite their failure to carry insurance. Of course, that is going to be a huge financial hit for the government. And, if we know anything about the Texas and federal government right now, the aid will go mostly to the wealthy and not so much to the working class and the poor.  

3) They will pay for it.

Some people have the money to fix their home and buy a car. Which is better than not being able to do that, but still an unexpected and dramatic financial hit for many of them. The money will come out of retirement funds and savings for college.  And, of course, this also leaves out the working class and the poor.

4) No one will pay for it.

This is the likely outcome for many people. They will never find or repair their car, and be unable to buy a new one. If they own a home, it is ruined and they can't afford to fix it. If they are renting, their possessions are gone.  There will be a new and desperate underclass created, stripped of the little that they had.

And none of this is good.


Comments:
Mark,
You have managed to present an eye opening overview of this catastrophic event that is also heart wrenching.

 
Yes . . . And there's also the question of people's jobs. I haven't heard any particular news about this, but I imagine there will be plenty of smaller employers, in particular, which won't be able to re-open. And others may take a very long time to re-open so that people who are able to have a place to live may not have a place to work.
 
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