New Orleans situation prompts many to inquire about coverage
As people from the hurricane-ravaged Gulf Coast region struggle to put their lives back together, a dividing line as potent as high and low ground has emerged: insurance.
In some areas hit by Hurricane Katrina, at least half and sometimes nearly all the affected households carried no flood insurance. For those without it, the prospects for rebuilding are grim.
That tough lesson is hitting home in the Sacramento region as people reflect on their homes, their possessions and their lifestyles and what would happen if a flood occurred here.
With the haunting images from Katrina on their minds, more and more people are calling their agents, checking out prices and choosing to buy flood insurance.
At the same time, many real estate agents and insurance brokers are reaching out to clients, urging them to consider flood insurance, which in many local areas is available from the federal government for $300 or less a year.
“I paid over $300 for a screen door, for crying out loud,” said Katie Mack, who has a real estate firm in Gold River, buys flood insurance for her home in Carmichael and has been urging clients to do the same. “Why wouldn’t I pay that much to protect myself?”
Sacramento may not face hurricanes, Mack and others said, but it is a community protected by a dam and miles of levees, with no guarantee they won’t some day fail and cause a Katrina-like catastrophe.
That message is sinking in for many.
“It really has me thinking what if it happened here,” said Joanna Bergez, 60, an American Red Cross volunteer who has been helping evacuees after Katrina.
On Wednesday, Bergez called her insurance agent to discuss flood insurance rates. She and her husband, Lou, moved to North Natomas last December and, until now, hadn’t worried much about flooding. But after levees breached in New Orleans and flooded the city, Bergez realized she shared something in common with many victims of Katrina: She, too, has levees nearby.
“There’s been a definite spike in the phone calls and e-mails for quotes for flood insurance,” said Jeff Hinesly, flood products manager for Farmers Insurance in Los Angeles, noting that inquiries are up not just in Northern California but across the state and nation. “People are concerned. They want it now.”
Disasters are high on people’s minds this fall, agreed Susan Horn-Deubel, an El Dorado Hills agent for Allstate Insurance Co.
In recent weeks, she said, she has received numerous calls from people across the region — including some living on high ground in El Dorado Hills who face little flood risk — wondering if they should insure their homes against flooding. Some callers also have asked about earthquake insurance.
“Katrina has just created a lot of fear,” Horn-Deubel said.
Jeanne Mattes, an agent with the Sacramento firm John O. Bronson Co., has experienced the same.
“I wrote four new flood policies today,” Mattes said Wednesday. “It’s really starting to heat up.”
Stein Buer, the executive director of the Sacramento Area Flood Control Agency, said it is a healthy trend for Sacramento-area residents to pause and evaluate their personal flood risks.
For years, Buer and other local flood control experts have warned of the dangers of living at the confluence of two mighty rivers – the Sacramento and the American. The Sacramento area is surrounded by levees that – despite improvements in recent years – still are at risk of failing during times of heavy rain and snowmelt.
The region experienced two major flood events in 1986 and 1997. No other major metropolitan area in America has a greater risk of a severe flood, Buer said.
Yet, flood insurance has been a hard sell in many local neighborhoods, such as North and South Natomas, where an estimated 15 percent of households carry it.
Some parts of Sacramento – including Greenhaven, the Pocket and much of Meadowview – carry a high-risk designation for flooding. Most mortgage-holders in those areas must carry flood insurance, although levee repairs are expected eventually to lift that requirement.
Other areas recently were relieved of an identical flood insurance requirement after the Federal Emergency Management Agency released them from the high-risk designation. The remapped areas include Oak Park, Curtis Park, downtown, Land Park, east Sacramento, Rosemont and numerous neighborhoods along the American River.
On Feb. 18, flood insurance became optional for those in the remapped areas, and people became eligible for lower-priced “preferred risk” flood policies through the National Flood Insurance Program.
Many chose to buy the cheaper federal flood insurance, which is sold through private companies.
Others, however, saw it as a way to save a few hundred dollars a year and chose not to buy it.
Now, a number of those are returning to their agents with changed minds.
Some are buying more than just a preferred-risk policy from the federal government.
The preferred risk policies cover up to $250,000 in rebuilding costs, and up to $100,000 in contents. But many have homes and possessions worth more than that.
Typical homeowner’s insurance policies do not cover flooding. But many companies allow people to “schedule” certain items of value, such as pianos or paintings, for additional coverage.
Cameras, coin collections, antiques, bicycles and other sports gear, jewelry, musical instruments, silverware and furs are among the items companies will schedule for added hazard insurance, which can cover flooding.
Flood and insurance experts said people should inventory their possessions and what the cost would be to repair or replace their home, and then check with their agents to discuss insurance options.
For renters, typical insurance policies do not cover damage to possessions from flood or earthquakes. But additional insurance for flooding may be purchased.
Policies can differ greatly from company to company, so people should shop carefully and read every inch of fine print before buying insurance, said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights.
In addition, Heller advised going room by room — and even drawer by drawer — with a still or video camera to document property and possessions that might be damaged in a disaster, and storing those images, along with other vital records such as insurance policies, receipts and purchase records, in a secure location.
The Bee’s Deb Kollars can be reached at (916) 321-1090 or [email protected]