Get the Flood Coverage You Need

After seeing all of the damage from Hurricane Katrina last year, I'd like to get flood insurance before hurricane season starts this year. Can I still get the coverage, and has the price gone up a lot since last year's hurricanes?

Although Congress is discussing some major changes to the national flood program for the future, the program hasn't changed so far. Homeowners insurance policies don't cover flood damage, but you can buy the coverage through the National Flood Insurance Program. People in low-risk areas can still get the maximum $250,000 coverage for less than $360 per year. It's a good idea to get the coverage as soon as possible, because hurricane season starts on June 1 and there's a 30-day waiting period before the coverage takes effect.

The insurance is provided through the National Flood Insurance Program but sold by local agents. So you can either contact your homeowners insurance agent about the coverage or find a local agent through FloodSmart.gov, where you can also get price quotes for the coverage.

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As many Hurricane Katrina victims discovered, the flood coverage can make a huge difference even if you aren't considered to live in a flood zone. Many people in Louisiana and Mississippi hadn't purchased flood coverage because it wasn't required by their mortgage company, then received no payout from their homeowners insurance company after their homes were destroyed by the storm. The average flood insurance claim was nearly $95,000 from Hurricane Katrina and $46,000 from Hurricane Rita.

But those full limits can be a lot less than the cost to replace your home. The national flood program's coverage amount is limited to $250,000 for your house and $100,000 for your possessions. Several insurers, such as Chubb and Fireman's Fund, offer excess flood coverage that pays out after you max out coverage through the national flood program. Ask your insurer or agent if your homeowners insurance company sells extra coverage.

The national flood program -- and most excess flood policies -- have other limitations, too. The national flood policy doesn't cover most electronics in basements (generally limiting coverage to appliances like washers and dryers), does not provide coverage for additional living expenses while your home is uninhabitable, and covers only the depreciated value of many items -- not the replacement cost. But a very few companies, like Chubb, are just starting to offer their own flood policies instead of the national flood program (not just excess flood policies), which cover many of these areas much like most homeowners insurance policies do.

The Chubb flood policy is available only to people with Chubb homeowners insurance policies--– which generally requires a home to be worth at least $500,000 to $750,000, depending on the location -- and costs more than coverage through the national flood program. And it's only available in seven states so far (Louisiana is not one of them), with 20 states expected by the end of the year.

For more information about the upcoming storm season, see Waiting For the Big One. Also see Six Steps to Protect Your Home and Insurance Lessons After Katrina.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.