Number 1 I have no problem with. If a homeowner doesn't buy flood insurance that their problem. Hurricane insurance and flood insurance are two entirely seperate things, any homeowner should know that. In fact I'm pretty sure that the lienholder on your mortgage makes that very clear when buying your house if you live in an area like that.
A private insurance company doesn't get to pick the definition, they can't 'waive the fine print', the definition of a flood is determined by the federal government, who is the only person that provides flood insurance, and the only entity that can pay out on flood claims. There's a reason that fine print is in there -- it outlines where a private entities responsibility stops and the government's responsibility starts.
Besides the point that any company should not have to 'waive the fine print' because consumers are too ignorant to actually read it. No matter what issue we're talking about. Your homeowner's insurance makes it clear it doesn't cover natural disasters. Your hurricane insurance makes it clear it doesn't cover flooding. And your flood insurance makes it clear it doesn't cover hurricanes.
Number 2 is, of course, utter crap and people doing that with the intention to mislead and/or defraud should be drug out in the streets and shot. And, though I don't doubt that it has occured, I wonder just how prevalent such activity really is. A company knows the kind of coverage this story is getting, any sort of negative press like that would be economic suicide. They're not that dumb.
