Are you a resident of California? Texas? Mississippi? Louisiana? Florida? If you can answer yes to any of those then you're all too familiar with the difficulties people face obtaining homeowners insurance when they live in a high risk area. Insurance companies are often very reluctant to insure homes in an area that presents a high risk of actually having to file a claim, and as a result there are thousands of homeowners left homeless and heartbroken after a natural disaster strikes.

The government, after paying out billions of dollars in storm damages under federal disaster programs, has finally established a series of mandates intended to protect houses in high risk areas through the development of a "shared" market, a series of involuntary homeowners insurance plans and guidelines that ensure that everyone has the protection they need, regardless of where in the country they happen to live.

Voluntary Homeowners Insurance

If you've purchased a homeowners insurance policy through a company such as Allstate or State Farm you're already familiar with the concept of voluntary homeowners insurance. Voluntary homeowners insurance is a booming business in the U.S., made even more so by the fact that most homeowners are required to have insurance if they are renting or have not yet paid off their mortgage.

Voluntary homeowners insurance is exactly what it sounds like-voluntary. Companies offer this type of coverage because they choose to, and because of this they have an almost limitless freedom to decide what they are and are not going to cover under their standard policies. Earthquake and flood coverage tend to fall into the "not" category, making it difficult for homeowners in high risk areas like oh, say, California or the Gulf of Mexico (earthquake and flood zones, for anyone who hasn't had the pleasure of watching their bookshelves dance at two in the morning or taking a swim down Main Street on a summer's afternoon) to find the coverage they need.

Involuntary Homeowners Insurance

Because most homeowners insurance providers don't want to find themselves saddled with a property they can almost guarantee is going to cost them money in the long run the government has stepped in and established the involuntary insurance market-i.e. guidelines stating that certain individuals in certain areas are required to be covered, at a reasonable cost, and certain insurers are required to provide that coverage. This can take the form of the FAIR plans or the Beach and Windstorm plans available in some areas, along with other state funded programs, or go through FEMA (as in the case of the National Flood Insurance Program).

There are many people who don't believe that the government has the right to force insurers to provide coverage, claiming that the costs don't justify the returns; however, without involuntary homeowners insurance programs there are thousands of individuals from coast to coast who would find themselves without a home or any hope for their financial future after taking care of the damages. Sometimes, it's a very good thing that big brother is watching.