La. Commissioner Wants 100% Participation in Flood Insurance Program

For Louisiana Insurance Commissioner Jim Donelon in the best of all possible worlds 100 percent of the citizens in his state would have flood insurance coverage for their homes. As such, Donelon has been on a statewide “Storm Awareness Tour,” to drum up interest in the National Flood Insurance Program.

On June 22, he takes the 2007 Storm Awareness Tour to the Louisiana Chapter of the National Association of Insurance and Financial Advisors of Louisiana Convention at L’Auberge du Lac Hotel and Resort in Lake Charles, where he will address insurance issues consumers should be aware of in what is projected to be an active hurricane season.

Storm season is “a good opportunity for our citizens to do an inventory of their insurance needs and resources,” Donelon told Insurance Journal by phone from Alexandria. “Starting with flood insurance that covers properties for damage from water — typically homeowners policies do not.”

He said only 40 percent of the victims of Hurricanes Katrina and Rita in his state had flood insurance in place. While the percentage is twice that of Mississippi Katrina victims, where only 20 percent had flood insurance, Donelon says it’s not enough. Currently about 31 percent of all homeowners in Louisiana carry flood insurance.

Awareness is fairly high among Louisianans in coastal and below-sea level areas, such as New Orleans, Donelon said. Lenders require homes in flood-zoned areas to have flood insurance, but there’s more complacency among those in higher elevations.

However, the “Federal Flood Insurance Program points out that 20 to 25 percent of the claims they pay are in areas that are considered low to moderate flood risk, meaning their elevations are above those typically requiring flood insurance for loan eligibility,” he said. “My message to people of central Louisiana … and for the entire state for that matter on this tour is: Everyone in our state should access the federal flood insurance program. It’s the best insurance value one can buy in Louisiana, as we are one of three states that are net consumers of the program, meaning, we pay less in premiums than we receive back in payments in flood losses.” Donelon added that Texas and Florida are the other two states in that situation.

Donelon also said federal flood insurance is a good deal for Louisiana homeowners. Since it’s a nationwide program, prices are based on the nationwide experience.

“Depending on your elevation the cost differs,” Donelon said. “But even for folks living in flood prone areas – low elevations in Louisiana – it’s a good buy because the prices are based on the nationwide experience and we in Louisiana are net consumers of flood insurance benefits.”

An announcement issued by the Louisiana Department of Insurance offered the following advice for insurance consumers:

Be Floodsmart – Reduce your Risk

* Learn your flood risk. Properties that are not located in high-risk areas can also flood. Find out your flood risk right now by entering your address at www.FloodSmart.gov “Assess Your Risk.” Your insurance agent can also help you check your risk.

* Plan for evacuation. Plan and practice a flood evacuation route, ask someone out of state to be your “family contact” in an emergency, and ensure everyone knows the contact’s address and phone number.

* Move important objects and papers to a safe place. Store your valuables where they cannot get damaged.

* Conduct a thorough home inventory. Thorough documentation of your belongings will help you file your flood insurance claim. For more information, visit www.knowyourstuff.org.

* Build an emergency supply kit. Food, bottled water, first aid supplies, medicines, and a battery-operated radio should be ready to go when you are. Visit www.ready.gov for a disaster supply checklist.

* Reduce your flood risk through home improvements. Visit www.FloodSmart.gov to learn about ways to lower your risk of sewer backup, electrical problems, basement flooding and other flood-related issues.

* Purchase a flood insurance policy. Most homeowners insurance does not cover floods and there may be a 30-day wait before a flood policy becomes effective. If you already have a flood policy, remember that your policy needs to be renewed each year.