Let's Prove We Learned From Katrina And Buy Flood Insurance

It's hard to forget last year's hurricane season and the lessons we all should have learned from it.

One of the chief lessons for both homeowners and renters: Consider getting flood insurance.

Here are two facts I bet you didn't know: Floods occur in all 50 states. And most homeowners insurance does not cover flood damage.

Here's another fact you may not have realized: The Atlantic hurricane season begins June 1. It's important to remember that date because flood insurance requires a 30-day waiting period to take effect. This means that if you have damage from a flood, you'd better hope and pray that your policy was put in place 30 days before the damage, or you are not covered.

Only about half of homeowners living in some of the most flood-prone areas of the United States buy federal flood insurance, leaving millions of families at risk for severe financial losses when floods strike, according to a study released this year by the Rand Corp., a nonprofit research organization.

The Rand study is part of a wide-ranging evaluation of the nation's flood insurance system. The study was requested by the Federal Emergency Management Agency, which is still dealing with the devastation of Hurricane Katrina.

"Forecasters say this hurricane season could be as destructive as 2005, the worst on record," said Jesse Muñoz, acting director of the Transitional Recovery Office for the Mississippi Hurricane Katrina efforts, in a FEMA release.

For most homes, apartments and businesses, the only insurance protection against damage from rising water is flood insurance underwritten by the National Flood Insurance Program (NFIP). This program is greatly underutilized, even though flooding is a major source of loss to individuals and businesses throughout the United States, according to the Rand study.

Most homeowners who buy flood insurance do so because they are required by their lenders. That's because they live in areas considered most vulnerable to flooding, the study found. Just 20 percent of homeowners living in the most flood-prone areas buy federal flood insurance when they are not required to do so, the study said.

One of the reasons many people don't buy flood insurance is simple: They don't think they need it, said Lloyd Dixon, senior economist at Rand and lead author of the study.

"If people don't see water, their risk perception is lower," Dixon said.

But roughly 25 percent of all claims paid by the NFIP are for policies in low- to moderate-risk communities, according to FEMA.