By CARRIE KIRBY
San Francisco Chronicle
September 06, 2005
Flood insurance is not included in standard homeowner policies, but it is available through the federal government. The National Flood Insurance Program, the branch of the Federal Emergency Management Agency that provides flood insurance, expects more than $2 billion in insured losses from Katrina's floodwaters.
With about only 40 percent of residents in the area having flood insurance, victims will have to absorb billions in losses on their own. They will have to draw on limited disaster grant and loan programs, personal savings and second mortgages to rebuild. Even those whose losses are insured may have to fight to get settlements large enough to rebuild, if past disasters are any indication.
"I have no idea what to expect, and, quite frankly, I'm scared to death," wrote Amanda Brumfield, of Hattiesburg, Miss., in an e-mail to The Chronicle. "Our house is a disaster, but who knows what the insurance company will do/say/cover."
Those with both regular homeowner insurance and flood insurance may find themselves caught between insurers arguing over who should pay for what, warned Steve Kanstoroom, who was a victim of Hurricane Isabel flooding back in 2003 and who went on to became a victims advocate. Although flood insurance is provided and guaranteed by a federally backed program, it is sold through private insurance companies.
"I had one victim who had flood and wind damage covered through the same carrier. The flood adjuster said he had wind damage and vice versa," said Kanstoroom, of Talbot County, Md. He said he has already heard from relatives of more than 100 Katrina victims who are wondering how to get money to rebuild.
"It's a sticky issue in terms of what's flooding and what's not," said Loretta Worters, a spokeswoman for the Insurance Information Institute, which is supported by the insurance industry. Rain driven into a home by wind should be covered by homeowner insurance, whereas water that seeps in because of flooding should not, she said.
Many victims of past floods are frustrated with the payoffs they received through the National Flood Insurance Program. A class-action lawsuit was filed in June against FEMA, as well as the insurance companies and other firms involved in administering the policies, charging that victims of Hurricane Isabel were underpaid for their claims. Maryland Insurance Commissioner Alfred Redmer Jr. has also complained about the issue in congressional testimony.
Two of the plaintiffs are Jennifer Dieux and Eric Mackay, of Shady Side, Md., who two years after the hurricane are still living in an 8- by 30-foot FEMA-provided trailer with their three children and dog.
Behind the trailer sits the family's three-bedroom home. When Isabel hit, a foot of water filled the house, damaging the foundation and cracking the walls. Rampant mold and a floor covered with silt make it impossible for the family to go inside.
"I said, 'I'm not worried, I have insurance,' " Dieux said. "I figured we would get replacements on everything that was damaged."
The family was covered up to $109,000 for flooding, but was paid only $50, 000. They hope to tear down the house and rebuild on a budget of $185,000.
"We're going to have to get a second mortgage," Dieux said.
Ed Pasterick, a senior adviser with the National Flood Insurance Program, said that many of the complaints stem from hurricane victims not understanding what their policies cover.
"In every disaster, some people will feel they should have been paid more, " he said.
But Kanstoroom, the victims advocate, said that insurance adjusters who contract with the government to process the claims gave victims inaccurate information, leading them to believe the program covered less than it really does.
"It's vital that (victims) know what they're entitled to receive," said Kanstoroom, who offers that information at his Web site, www.femainfo.us. After his home was damaged by Hurricane Isabel, he was offered a $40,000 settlement on his $250,000 policy. After he fought it, he was given $250,000, the maximum for residential flood insurance. Both renters and homeowners can also insure the contents of their homes through the program.
Kanstoroom and other Isabel victims began complaining to government officials. A General Accounting Office investigation and congressional hearings followed. FEMA ended up reviewing more than 2,000 cases and paying out an additional $8 million. But the problem is far from resolved, victims say.
Without flood insurance, the scenario is even bleaker. The Maryland home of Gabe and Anne Quetel, both in their 70s, was destroyed by Hurricane Isabel's floodwaters.
In January, they moved into their new home, paid for with a $142,000 second mortgage. They reluctantly accept help from their children in making their mortgage payments of more than $1,000 a month.
"It's a rough time of life to start over," said Anne Quetel, who uses a walker and needs an oxygen tank because of congestive heart failure. Her husband uses a cane.
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