Many realize water risk too late: Homeowners insurance does not cover flooding

Neighborhoods of homeowners with no flood insurance, said David Colmans, the executive director of the Georgia Insurance Information Service, an Atlanta-based clearinghouse on insurance information for consumers.

"It is sad that people don't get the seriousness of flooding," Mr. Colmans said.

Take the September flooding in Atlanta, for example. It was a "major disaster mostly because people didn't have flood insurance coverage," he said.

A homeowner's or renter's insurance policy does not cover damage caused by a flood. That takes a special policy and additional cost.

Mr. Colmans said he spends a lot of time trying to dispel myths about flood insurance, one being that it is needed only if the home is in a flood zone. Between 25 percent and 35 percent of flooding in the U.S. occurs outside designated flood plains, he said.

"People don't get the issue. Because they don't live in a flood plain and the mortgager tells them they don't have to have it," they don't get the flood insurance, he said.

"And then look what happens, you get these big floods. And then they have to pray for a FEMA loan," Mr. Colmans said.

The only property owners required to buy flood insurance are those who have federally backed mortgages on property that lies within the official flood hazard area.

All flood insurance is backed by the National Flood Insurance Program. All insurance companies that write flood policies use a write-your-own policy through the Federal Emergency Management Agency, which administers the program, he explained.

The program's Web site, www.floodsmart.gov, has a risk-assessment tool: Just enter the address, and the risk level for flood damage will be reported. Risk levels can be higher for people who live near streams even though they aren't in official flood zones.

"It is good to know your risk," Mr. Colmans said. "It is something to make a decision other than 'I'm not in a flood zone.' "

The National Flood Insurance Program made policy revisions Oct. 1 that resulted in higher deductibles and an average 8 percent increase in premiums, said Allison Dean Love, the executive director of the South Carolina Insurance News Service.

The average cost of a flood insurance policy is $540 a year. The cost is based on the flood risk and the value of the home.

Homeowners can buy up to $250,000 of coverage for the structure and up to $100,000 for personal contents. Businesses can buy up to $500,000 in coverage for the structure and $500,000 in contents coverage, Ms. Love said.