Published: June 14, 2008 10:41 pm         

Misinformation about flood insurance leaves some with nothing

TERRE HAUTE — When Denise Hutcheson tried to buy flood insurance for her home at 1433 S. Fruitridge Ave. last year, she was told she couldn’t because she didn’t live in a flood plain.

That incorrect information has cost her dearly. Because of last weekend’s severe rain and flooding, Hutcheson lost many possessions, and her home is now uninhabitable.

“My agent denied me flood insurance because I was not in a flood plain,” she said.

Hutcheson believes she’s not the only one who has been given misinformation.

To add to the misery, homeowners insurance does not cover flooding.

The fact is, anyone can buy federal flood insurance as long as they live in a community that participates in the National Flood Insurance Program, according to the Federal Emergency Management Agency Web site.

Most, if not all, of Vigo County participates in the program.

“Everyone in Vigo County should be able to get flood insurance,” said Leo Skinner, FEMA spokesman. Premiums will vary, depending on where the person lives and the flood hazard risk, he said.

Vigo County’s unincorporated areas, the City of Terre Haute and Town of Seelyville participate in the program, according to a listing of communities on a FEMA Web site dedicated to flood insurance, www.floodsmart.gov.

It was not immediately clear whether the towns of West Terre Haute and Riley participate in the National Flood Insurance Program. They were not listed on the Web site, and officials with the respective town boards said they did not know.

Skinner — upon further checking with a hazard mitigation specialist — said he was not aware of any portion of the county ineligible for flood insurance on Friday.

Jeremy Weir, executive director of the Vigo County Area Planning Department, agreed there appears to be a lot of misinformation in the community with regard to flood insurance. To participate, a community must follow FEMA flood plain management guidelines, he said.

“We have a flood plain ordinance and we also do public outreach,” he said. Among other ordinance requirements, new construction in a flood plain must be elevated.

When communities participate, FEMA does require reasonable mitigation of flood risks including construction and maintenance of levees to FEMA specifications, restrictions on building in flood hazard areas and maintenance of drainage ways, said Scott Rusk, a real estate appraiser who has dealt with flood insurance for the past 16 years as part of the appraisal process.

He’s concerned about the misinformation that exists as well.

“I shudder to think of how many people asked about flood insurance and were told by their agents that they could not get flood insurance, but actually could have been insured and now have lost everything because their agent was either misinformed, or just too lazy to do the paperwork for the small commission,” Rusk said.

He does about 300 appraisals a year, and if people live in an area prone to flooding, he tells them to contact their insurance agent.

For those homes in low flood-risk areas, flood insurance can start at as little as $119 per year, he said. He noted that the FEMA flood insurance Web site also has an agent referral page.

He believes that anyone who lives in a flood plain or near a flood plain should buy flood insurance. “As we saw with this flood, areas that are low-risk did flood,” Rusk said.

Tom Roberts, a State Farm Insurance agent, said he has clients “completely wiped out” by flooding because they have no flood insurance and homeowners insurance doesn’t cover flooding.

“It’s heartbreaking. I’ve been to a lot of clients’ homes. Some people say they may have to file bankruptcy,” Roberts said. “It’s really a tough situation. It certainly makes people think about Katrina. A lot of folks won’t be able to rebuild.”

For some people, all they can do is walk away. “Many of these homes won’t be good for anything,” Roberts said.

Those who buy flood insurance usually do so because it is required to obtain a mortgage in a flood-prone area, Roberts said. They may let it lapse after they have paid off their mortgage. “It costs almost as much as their regular, annual homeowners insurance,” he said.

Also, many people only buy enough insurance to cover the structure, not contents or outbuildings, he said. He knows of several residents in that situation, where the structure was covered but none of the contents.

Roberts noted that those in Vigo County who live outside of a flood plain can get a preferred rate for insurance because the area they live in has less risk of flooding.

Flood insurance can be expensive, and it has other disadvantages. For those who have to move out of their homes because of flood damage, it does not provide coverage for additional living expenses, Roberts said.

“Flood insurance is strictly catastrophic only. There are no bells and whistles,” he said.

The FEMA Web site, www.floodsmart.gov, provides detailed information about flood insurance. It includes answers to commonly asked questions and even includes a Flood Risk Profile where residents can plug in their address and get estimates of how much flood insurance might cost.

For one home in Deerfield subdivision with a low-to-moderate flood risk, estimated annual premiums were $39 to $571 for contents only; $285 to $849 for building only; and $119 to $1,385 for building and contents, according to the Flood Risk Profile.

For a home on Dawn Lane in Marywood subdivision listed as high risk, estimated annual premiums were $145 to $1,148 for contents only; $403 to $1,701 for building only; and $509 to $2,766 for building and contents.

Flood insurance will provide up to $250,000 in coverage for a single-family dwelling (structure) and up to $100,000 for contents of a residence.

Hutcheson, 48, who lives with her 17-year-old daughter, said she plans to file a complaint with the Indiana Department of Insurance and the Indiana Attorney General’s office.

“I would like for them to look into this,” she said. “I feel I should be compensated because I was denied the opportunity to purchase flood insurance.”

She knows hers is not an isolated case, and she urges others with similar stories to take similar action.

Sue Loughlin can be reached at (812) 231-4235 or sue.loughlin@tribstar.com.