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Don't Just Get Flood Insurance -- Keep It

Lauren Tara LaCapra

In the North Central states where most of the flooding has occurred, about 17% of homeowners have flood insurance, according to a survey by the Insurance Information Institute. That portion is in line with the national average and has nearly doubled from just 9% a year ago. Still, some at-risk areas across the U.S. still do not have sufficient coverage.

For instance, NFIP participation in the Gulf Coast spiked following the devastating 2005 hurricane season. Many had not been covered for damages that Hurricane Katrina caused as it ripped through the area, destroying entire neighborhoods with water and wind.

Still, many homeowners did not renew their flood-insurance policies when the next seasons didn't bring such destruction. The III survey showed that 17% of homeowners in the South have flood insurance today, down from 20% a year ago.

"We've seen it with floods, we've seen it with earthquakes," says Loretta Worters, spokeswoman for the III. "After the first year, often, it starts to drop off and goes back to levels from before the disaster."

Floods -- including inland flooding, flash floods and seasonal storms -- occur in every area of the U.S., according to the Federal Emergency Management Agency, which oversees a subsidized insurance program called the National Flood Insurance Program, or NFIP.

Standard homeowners insurance does not include coverage for flood damage, although buying insurance through the NFIP is relatively affordable, with premiums starting at $112 per year for low-risk areas. The NFIP will cover up to $250,000 for the home itself and $100,000 for its contents. Renters can pay as little as $39 per year for $8,000 in contents coverage.

Federal flood insurance is available to communities that participate in the NFIP -- mostly coastal areas and those on the 100-year flood plain. Homeowners can find out more information about risks and coverage at the NFIP's FloodSmart Web site.

Still, FEMA has been criticized for not modernizing its outdated floodplain maps, leading some residents to underestimate their risk of flooding.

According to the Associated Press, FEMA and local officials had assured residents of Gulfport, Ill., that their levee was sturdy enough to endure a major flood. That led some homeowners to drop their flood-insurance coverage and others to develop the area further without considering the flood risks.

Many were regretting that decision and pinning the blame on officials when the levee burst on Tuesday. The town was submerged in 10 feet of water and just 28 property owners in the 750-person town were insured, the AP reported.