Despite lack of hurricanes, don’t forget flood coverage

May 8, 2008

Daytona Beach News-Journal–May 08, 2008

Business Writer

After making it scot-free through the past three hurricane seasons, most Volusia-Flagler residents are playing the odds they can survive yet another storm period without any flood damage.

But the clock is ticking against them, warns the Federal Emergency Management Agency, which is urging homeowners to sign up for federal coverage against floods.

“For a homeowner with a typical 30-year mortgage, there’s a one-in-four chance they’ll have flood damage sometime during the life of that mortgage,” said FEMA regional spokeswoman Jody Cottrill in Atlanta. In comparison, the odds of a house fire are only 1 in 25.

Most private insurers refuse to sell coverage against flood losses, so property owners have to buy it from the federal government’s National Flood Insurance Program. For most owners, there’s a 30-day waiting period before the coverage kicks in. Consequently, FEMA officials are urging owners to buy it as soon as possible so it can be in force shortly after the June 1 start of the next hurricane season.

If their building sits on high land, the cost is about $300 a year. But if their property occupies low-lying land classified by the government as a flood hazard, the annual premium could range anywhere from $500 to $5,000 or more, according to Larry LaHue, plans coordinator for the Volusia County Office of Emergency Management. That’s on top of other premiums that owners pay to insurance companies for standard coverage against fire, theft and wind damage.

Flood insurance is sold in two segments. The basic tier, which covers damage to a structure up to a $250,000 cap, is the part required by lenders. A second tier, which is optional and more expensive than the basic level, insures the contents of the home up to $100,000.

As of February, nearly 63,000 area homes and businesses carried flood insurance — or roughly one-quarter of private structures in the two-county area. But most owners buying the extra protection are doing so only because lenders holding mortgages on their properties require it.

Among the rest, only 10 to 20 percent opt for flood protection, estimated Jack Mill, a retired insurance agent who teaches a flood insurance class at Daytona Beach Community College.

Mill said the federal program specifically covers damage caused by rising water, such as a coastal storm surge, overflows of streams, retention ponds and canals or deluges from a broken water main. To qualify as a covered “flood,” the torrent of water has to damage at least two or more homes.

Flood policies also reimburse owners for loss prevention expenses, such as emergency rentals of storage space in safe areas, and purchase of sandbags and lumber to construct barricades.

Hurricane wind policies cover water damage only if it involves rain that came in through broken windows or missing roofs, Mill added.

About 6,600 Volusia-Flagler households added flood insurance in 2005, while 8,000 added it in 2006. FEMA was unable to provide local figures for 2007. But for Florida as a whole, the number of policies increased just 2 percent, while nationally the program has been growing 9 to 10 percent annually since 2004.

“Generally, Florida is becoming more complacent about flood risks,” Cottrill said.

LaHue said his impression is that flood insurance is growing just incrementally, clustered mainly in beachside areas, plus locations near the Halifax and St. Johns River and major lakes.

But gaps remain even in hazardous areas. Noting DeLand has only 176 flood insurance policies in place, LaHue remarked, “Wow, they’re way underinsured.”

Zoning changes and updates of flood zone maps tend to spur enrollment, said Alison Boscovich, a State Farm agent in Ormond Beach. Neighborhoods that never were required to have flood insurance suddenly learn they’re in areas that have at least a once-in-a-century chance of flooding. Recent reclassifications have forced owners in the North Beach Street and Central Park areas of Ormond to join the program.