- The Washington Times - Monday, March 22, 2004

POQUOSON, Va. (AP) — When Linda Fisher returned to her 175-year-old home after Hurricane Isabel, she found it flooded with water blackened by oil tanks, septic tanks and grease traps. Everything on the first floor was ruined.

Miss Fisher has a full-coverage policy under the federally managed National Flood Insurance Program, but her claim was settled for $56,000 — less than the $70,000 it will take to return her house to a livable condition.

In addition, the government is requiring Miss Fisher to elevate her house 5 feet because the flood damage totals more than half the house’s market value. Miss Fisher’s flood insurance will pay up to $30,000 for the work, but she was told it would cost at least $40,000.

“I pay $100 a month for flood insurance. For what?” she said.

Six months after Hurricane Isabel, many in this old Chesapeake Bay town still are reeling from the blow. Some had no flood insurance, but even those who did say it fell tens of thousands of dollars short of covering their losses.

So far, the government has paid out nearly $40 million on 2,000 flood-insurance claims from the town, but many residents are complaining about low damage assessments, limits on coverage and poor communication by the agents who sell the policies.

Poquoson is just a microcosm of the greater problem post-Isabel. Hundreds in Maryland, Virginia and North Carolina have voiced similar concerns to state insurance regulators, members of Congress and the federal agency that runs the National Flood Insurance Program.

The Federal Emergency Management Agency (FEMA) will hold a two-day summit in Falls Church this week for state and federal insurance officials and private insurers to discuss the complaints. The issue also likely will arise during a U.S. Senate subcommittee meeting Thursday on reauthorization of the program.

Ed Connor, head of industry relations for the flood program, said some changes can be expected immediately. He said, for instance, a formal process will be established for reviewing settlements that people feel are too low, replacing the current informal review process.

Mr. Connor said a few flood victims also will attend the conference to share their stories with officials. He said one of the most common complaints is that the basic flood insurance policy covers only damage to the house, not its contents.

Flood damage is not covered by standard homeowner’s insurance policies. Flood insurance policies are underwritten by the federal government, although 95 percent of them are sold by private carriers. Coverage for contents can be purchased separately, but many people say their insurance agents never told them that.

Maryland Insurance Commissioner Alfred W. Redmer Jr. released a report this month calling for FEMA to require companies to audit policies at the time of purchase to make sure the correct classification, such as the flood zone designation, has been applied. The report also says consumers should fully understand the policies they buy.

Another complaint is that many adjusters used price guidelines distributed by FEMA that were based on a national database of new-construction costs, but the publisher of that database has said the cost of reconstruction after a flood loss could be 50 percent higher.

Jim Shortley, director of claims for the flood program, said adjusters are free to deviate from the numbers if they so choose. He said there is no incentive for adjusters to low-ball people because they are paid commission on the claims they submit and insurance companies receive 3.3 percent of the incurred loss.

“And this is not their money anyway; it’s federal money we’re talking about,” he said.

Mark Stevens, FEMA spokesman, said part of the problem in the wake of Isabel has been that states such as Maryland are not hit routinely by serious floods.

“A lot of policyholders, agents and adjusters were not as familiar with the rules and the terms of the policies and the coverages as people are in areas that experience floods more frequently,” he said.

Meanwhile, in Poquoson, some have decided it is not worth rebuilding and have put up their houses for sale. Others are thinking about it.

“If it happens again, I’m not coming back,” said LuAnn Taylor, whose insurance settlement was nearly $10,000 short of covering the damage to her home. “They can have the house. I’m not going through this again.”

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