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The Honolulu Advertiser
Posted on: Thursday, May 11, 2006

Reconsider buying flood coverage

By Michelle Singletary

It's hard to forget last year's hurricane season and the lessons we all should have learned from it.

One of the chief lessons for both homeowners and renters: Consider getting flood insurance.

Here are two facts I bet you didn't know: Floods occur in all 50 states. And, most homeowners insurance does not cover flood damage.

Here's another fact you might not have realized. The Atlantic hurricane season begins June 1. It's important to remember that date because flood insurance requires a 30-day waiting period to take effect. This means that if you have damage from a flood, you better hope and pray that your policy was put in place 30 days before the damage or you are not covered.

Only about half of homeowners living in some of the most flood-prone areas of the United States buy federal flood insurance, leaving millions of families at risk for severe financial losses when floods strike, according to a study released this year by the Rand Corp., a nonprofit research organization.

The study is part of a wide-ranging evaluation of the nation's flood insurance system. The study was requested by the Federal Emergency Management Agency, which is still dealing with the devastation of Hurricane Katrina.

For most homes, apartments and businesses, the only insurance protection against damage from rising water is flood insurance underwritten by the National Flood Insurance Program. This program is greatly underutilized even though flooding is a major source of loss to individuals and businesses throughout the United States, according to the Rand study.

Most homeowners who buy flood insurance do so because they are required by their lenders. That's because they live in areas considered most vulnerable to flooding, the study found. Just 20 percent of homeowners living in the most flood-prone areas buy federal flood insurance when they are not required to do so, the study says.

If you don't live in an area with a high risk of flooding, your premium could be as low as $112 a year, which would cover about $20,000 in building damage and $8,000 in contents. You have the option of selecting coverage in a range of yearly premium amounts. For example, for $180 a year, you can get $50,000 in building coverage and $20,000 in content coverage.

If you want more protection, and again if you aren't in a high-risk area, you can expect to pay as much as $317 a year for $250,000 worth of building coverage and $100,000 in content coverage. That's about $26 a month. It would cost two people more than that to go see "Mission: Impossible III" with popcorn and sodas.

If your community participates in the NFIP, you can purchase flood insurance from a licensed private insurance company or through an independent property and casualty insurance agent in your state. For information on flood insurance, go to www.floodsmart.gov.

Last year as I read reports of Katrina families and their hardships, I made a mental note to purchase flood insurance. But I didn't do it. This year I will. I don't want to learn my lesson the hard way.