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Flood Risk often Is Under-Insured

The Federal Emergency Management Agency is reminding homeowners that standard homeowners insurance policies do not cover losses from flood damage.

Noting that only residents in communities that participate in the National Flood Insurance Program are eligible, FEMA said it can be difficult for people living in communities that do not participate to obtain flood coverage, since they cannot buy government-backed insurance from the NFIP.

Participation in the NFIP requires consumers to adopt and enforce floodplain management ordinances to reduce future losses from flooding. Currently, some 5.4 million federal flood insurance policies are in effect in 20,300 communities nationwide that meet the participation requirements.

Flooding is the nation's largest natural disaster. In the 10-year period from 1996 to 2005, annual flood losses in the U.S. averaged $2.4 billion per year, according to FEMA.

To join the NFIP, a community must complete an application, adopt a resolution of intent to participate, and submit a floodplain management ordinance that meets or exceeds the NFIP's minimum criteria.

Recently, storms in Arkansas that have caused widespread flooding have taken center stage. More than $12.7 million in state and federal assistance has been issued in the state to help the recovery from tornados and severe storms that struck on Feb. 5.

That aid does not include flood insurance claims that may eventually be filed.

SNAPSHOT: FLOOD INSURANCE IN FORCENOW EXCEEDS $1 TRILLION

Year $ of Coverage Claims Paid

2000 $568 Billion $252 Million

2001 $612 Billion $1.277 Billion

2002 $654 Billion $433 Million

2003 $692 Billion $777 Million

2004 $765 Billion $2.190 Billion

2005 $877 Billion $17.403 Billion

2006 $1.01 Trillon $553 Million

Source: FEMA (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/

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