Insuring Against Natural Disasters

A typical homeowners policy will protect you from damage caused by fire or rioting, but it won't help you out if your home is flooded or your foundation cracks during an earthquake. You have to buy extra coverage for those things if you live in an area considered to be at high risk for them.

Even if you don't live in an area considered high-risk for earthquakes, floods, and other natural disasters, it's good to explore the possibility of getting even minimal insurance, just in case. Check to see exactly what coverage you have, and talk to your agent about what you may need to get and how much it will cost.

Flood insurance is available through the National Flood Insurance Program for communities that have adopted and enforced flood plain management ordinances. This federally subsidized program is administered by the Federal Insurance Admin-istration, which is part of the Federal Emergency Management Agency. You can call the National Flood Insurance Program at 1-800-638-6620.

Many homeowners in Florida had a rude, collective awakening in 2004 when three hurricanes hit the state in short succession, flooding and otherwise damaging or destroying hundreds of thousands of homes. It turned out that some homeowners had coverage through their insurance companies that predated guaranteed replacement cost. After the hurricane had come and gone, they found out their policies left them in a huge lurch, and were unable to rebuild their homes.

The Government Will Take Care of Us

Uncle Sam is getting tired of bailing out (no pun intended) people who live in flood plains but don't have flood insurance. There are moves underway to get more people to buy flood insurance so that the government won't have to keep putting out federal relief funds. You can't always count on federal funds in the event of a flood or other natural disaster, though. Less than 50 percent of flood sites are declared federal disaster areas, a designation necessary in order for them to be eligible for federal funds.

Even if you can get federal disaster relief funds, most of them are low-interest loans, not giveaways. Flood insurance program people say the interest you'd have to pay back on your federal loans would cost more than the approximately $300 yearly fee for flood insurance. And, they note, if you receive federal funds, you have to buy flood insurance afterwards to be eligible for any more funding. To be sure, $300 is a lot of money, but a flood can effectively wipe out your home and everything you own along with it.