Hurricane Sandy Sets the Stage for Insurance Battles

Thomas J. Crowley, chairman of the Independent Insurance Agents and Brokers Association expects that there could be "massive appeals" to governors of the affected states to intervene. Perhaps there could be class-action lawsuits that gained favor in Mississippi after Katrina.

But Crowley thinks homeowners will lose the battle. "Bottomline, you are in a low-lying area, and are near the water, you got to get flood insurance," he said.

Experts lament the lack of flood insurance which they argue is very affordable. Flood insurance with the NFIP costs less than $600 a year and gets you coverage of $250,000 for the house. In low-risk areas, the cost could be as low as $129 according to the NFIP website.

Not too high a price to pay, considering that there is a 26% chance of flooding damage in a 30-year mortgage period in high-risk areas, according to the website. Moreover, a 6 inch flood of water can cause damage equivalent of more than $20,000 in a house of $1,000 square feet.

As the program's website points out, disaster relief isn't as easy as it seems. Most relief comes in the form of a loan repayable with interest.

Darras suggests those whose homes have not been completely wiped out by the flood to carefully word their claims.

"I would not use the loaded word "flood"- I would say water damage," he advises. "Trees around my property fell and covered my drains. Or debris from the wind damage broke my pipes. I sure would make that argument rather than say water creeped in, crawled in or flooded my house.

A lot of people make the mistake, saying 'all of a sudden I was in 6 inches of water'. That water came in because of something. Words make all the difference."

-- Written by Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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