Floods often catch homeowners with their insurance down

NEW YORK – Spring rains may be good for lawns and gardens, but they’re not necessarily beneficial to all homeowners.

Storms and snowmelt can add up to raging rivers, overflowing lakes and tidal surges that cause extensive damage to homes. Some families learn too late that flood damage isn’t covered by traditional homeowner policies.

There is a way families can protect their homes and furnishings. Since 1968, the federal government has sponsored the National Flood Insurance Program to make insurance coverage available, not only in high-risk zones but in areas that are only occasionally threatened.

The program is overseen by the Federal Emergency Management Agency, with policies available to homeowners in more than 20,000 communities that have adopted flood-plain management ordinances. The government sets the rates on the policies, which are available through private insurance companies.

The two big disasters not covered in standard homeowner policies are floods and earthquakes, said Jeanne Salvatore, vice president for consumers affairs at the Insurance Information Institute, an educational center sponsored by property and casualty insurers.

“When it comes to water damage, one way to think about it is that homeowners insurance covers water from the top down, while flood insurance covers it from the bottom up,” she said.

That is, if wind damages a roof and water pours in and ruins the living room furniture and rug, a homeowners policy generally will cover the repair or replacement costs. But if a nearby creek overflows and fills the house with a foot of mud and water, the family is out of luck unless it carries flood insurance.

According to FEMA, a homeowner is eligible for up to $250,000 coverage for the house and $100,000 for its contents. Renters can get coverage of up to $100,000 for furnishings. Some 4.6 million policies were in force last year, and more than $605 million in claims were paid, the agency said.

Coverage isn’t cheap, and varies by how flood-prone an area is. The average premium is $520 a year for $100,000 worth of property coverage for a home without a basement and $615 a year for a home with a basement, FEMA estimates.

Still, insurance agent George Yates of East Hampton, N.Y., said eligible families should consider getting coverage. “You especially need it if you’re in a high-hazard flood zone – low-lying areas, coastal areas, areas near rivers and streams,” Yates said. “But even in zones where there’s low probability, there can be flooding. In fact, about 20 percent of claims are from areas where you wouldn’t expect to have a flood.”

A policy for a home in an area seldom threatened by flooding can run as low as $150 a year, he said.

Yates, a member of the Independent Insurance Agents and Brokers of New York, said families buying a home in a flood-prone area often find they have to get flood insurance before a financial institution will approve a mortgage.

Even those who have it should consult with their insurance agents periodically to ensure they are carrying enough to cover the appreciated value of their home and its contents, he said.

Those buying for the first time need to be aware that there’s a 30-day waiting period before coverage kicks in, and policies must be kept in force for at least a year.