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Thursday, Jun. 11, 2009

Flood insurance a necessity on Coast

Hurricane Katrina provided Coast residents a costly lesson on the need to buy flood insurance.

Before the storm, many residents were under the impression that commercial or homeowner policies covered a hurricane’s tidal surge. But those policies specifically exclude flooding, whether wind-driven or not.

Attorney General Jim Hood and policyholders challenged the exclusion in court, but lost. The courts upheld the flood exclusion, in force for decades, as valid for hurricanes.

The upshot of the lesson: The National Flood Insurance Program says 75,136 flood policies are now in force in Mississippi — a 58.4 percent increase since Katrina, when only 43,892 flood policies existed. Still that is a decrease from September 2008, just after Hurricane Gustav, when 79,200 policies were in force.

The Mississippi Insurance Department noted the decrease from 2008 in a recent news release. MID emphasized the decrease in policies along the Coast from 2008 to 2009: 6 percent in Hancock County, 9 percent in Harrison County and 5.5 percent in Jackson County.

“Now is not the time to become complacent regarding flood insurance,” Insurance Commissioner Mike Chaney said. “Just a few inches of water can cost thousands of dollars in repairs, and in this economy, few can afford that potential drain on their savings.”

As insurance policies go, flood insurance is a relative bargain. The average policy costs $540 a year. But properties in low- to moderate-risk areas cost as little as $119. Over the past 10 years, according to FEMA, the average flood claim has been more than $33,000.

Lenders require flood insurance on property financed in flood zones. Also, residents who received federal Katrina homeowner grants or SBA loans are required to carry flood insurance. Failure to do so could disqualify them for relief funds after future hurricanes.

Home, condominium and business owners can buy flood coverage for structures and their contents. Contents coverage also is available to renters. Maximum coverage for a home is $250,000, while a commercial building can be insured for up to $500,000. Separate limits apply for contents.

Also, deductibles apply separately for buildings and contents. Various deductibles are available. The higher the deductible, the lower the premium.

“We would encourage everybody, in coastal Mississippi in particular, to evaluate what their flood risk is,” said Susan Wilson, flood plain management and insurance branch chief for this region. “If you’re at moderate or high risk, flood insurance is encouraged.”

Local FEMA spokesman Jim Foster added: “Flood insurance is an important part of hurricane preparedness.”

Quick flood info The time to buy flood insurance is now. Private insurance policies do not cover tidal surge or other flooding from hurricanes.

All Coast communities participate in the National Flood Insurance Program, so policies are available for property owners and renters.

Policies take effect only after 30 days.

To learn more about different types of flooding, and evaluate the flood risk for your property, visit floodsmart.gov. The home page allows you to type in a street address, then tells you whether the property is at low, moderate or severe risk of flooding.

— ANITA LEE