Things you need to know about flood insurance

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NBC TV News – Today Show

MATT LAUER, co-host: We’re back now at 7:45. It’s been a heartbreaking week watching residents of the Midwest and the Plains states lose just about everything they have to those massive floods. The question now is would you be covered if it happened to you? Here’s TODAY’s consumer correspondent Janice Lieberman with important information about flood insurance.

JANICE LIEBERMAN reporting: Most homeowners’ policies do not cover flooding. As a result, an extra policy needs to be taken out to cover flood damage. Patricia and Lyle Nelson’s house was flooded by a creek that has inundated their entire town, Rushford, Minnesota. They are luckier than most because they have flood insurance.

LIEBERMAN: But how much of a difference is the question. Most people don’t purchase enough insurance to cover their home, according to David Maurstad from FEMA’s national flood insurance program.

Mr. DAVID MAURSTAD: They may have a $200,000 home, but they only bought a policy — a flood insurance policy for $50,000.

Ms. LIEBERMAN: If you live in a flood prone area like this one along the beach, you can expect to pay about $600 per year on flood insurance and 150 in a low risk area. But that policy will not cover the personal contents of your home. Depending on the area you live in and the size of your house, the price will vary. Consumer advocate Doug Heller says that’s not all homeowners need to be aware of when filing a claim.

Mr. DOUG HELLER ( Insurance companies use a host of different tricks to get people to accept low-ball settlements. They will have an adjuster come in and say that you haven’t met the deductible. They will ask people to sign on the dotted line and sign away their rights.

Ms. LIEBERMAN: Since there is no way to know what Mother Nature will bring, purchasing flood insurance can be a roll of the dice. But it may just be worth investigating. For TODAY, Janice Lieberman, NBC News, Miami.

LAUER: Jeanne Salvatore is with the Insurance Information Institute here in New York. Hey, Jeanne, good morning to you.

Mr. JEAN SALVATORE (Insurance Information Institute): Good morning.

LAUER: Let me start with — you heard some comments there at the end about insurance companies. And I should mention, your institute is an industry-sponsored institute. So, how do you feel about the idea that perhaps insurance companies are using tricks and loopholes to kind of cover some of the coverage policies?

Ms. SALVATORE: Well, I’m here today basically to educate people about flood insurance and that absolutely everybody should consider purchasing this insurance. It’s very important. And in fact, about 90 percent of all natural disasters have some form of flooding. So, important insurance.

LAUER: However, is there a, you know, is there any, I guess, credibility to the idea that perhaps some companies do hide some of the loopholes in the policy until you need them the most?

Ms. SALVATORE: No, insurance companies go through great pains to, first of all, explain that flooding is not covered. And you can get a flood insurance policy quite simply from the same agent or company who sells you your home or renter’s policy.

LAUER: You know, this may sound like a dumb question, but precisely what qualifies as a flood when it comes to an insurance policy?

Ms. SALVATORE: Well, flooding is water from the ground up. So, when you have water that comes into the home from the ground up, that’s a flood.

LAUER: So if you get 10 inches of rain and it comes in through your roof, technically that’s not a flood?

Ms. SALVATORE: Technically that’s not a flood, but you’re going to have coverage under your homeowner’s policy.


Ms. SALVATORE: So if, for instance, a window blows in from a hurricane or a bad storm and you’ve got rain coming into your house, that is generally going to be covered.

LAUER: You touched on this a second ago. So what you’re saying to people right now is get enough flood insurance that covers the cost of rebuilding your home and covers the cost of everything in your home?

Ms. SALVATORE: Well, what you want to do is to basically ask those two questions. People should call their agent, call their company, and say, `Look, I want to have enough insurance to rebuild my home. And I want enough insurance to rebuy, replace everything that’s in it.’

LAUER: All right. And when it comes to people who’ve already been affected by floods, the first thing you say is report the extent of the damage to your insurance company, and do it quickly.

Ms. SALVATORE: Call them immediately. And be organized. The more organized you are, the simpler and easier the claims process is going to be.

LAUER: And document this. I mean, don’t just call up and say, `It looks really bad here,’ and hang the phone up.


LAUER: You’ve got to get this down on paper, with pictures, things like that.

Ms. SALVATORE: Absolutely. Make lists, take pictures. And when you call your agent or company, let them know the extent of the damage. They are going to basically perform a form of triage. Worst case is going to get an adjustor first.

LAUER: But when it comes right down to it, and I’m sure there are thousands of people through the Midwest and Plains right now who are feeling this, the devil is in the details. Know the details of your insurance policy.

Ms. SALVATORE: Ask questions. Ask a lot of questions. And quite frankly, if your agent or company is not willing to answer those questions, find another agent.

LAUER: Find another one.

Ms. SALVATORE: It’s a very competitive business.

LAUER: Jeanne Salvatore. Jeanne, thanks very much. I appreciate it.

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