Homeowners' policies cover water damage caused by rain that gets in through damaged windows and roofs, said Jeanne Salvatore of the Insurance Information Institute in New York. But damage from rising surface waters, that is, flooding, is generally excluded, she said.
As a result, many families in flood plains and other low-lying areas often purchase special coverage under the National Flood Insurance Program. These policies are generally purchased through insurance company agents, and that's where families should go to file their flood damage claims, Salvatore said.
Getting government aid
The Federal Emergency Management Agency, which is responsible for coordinating recovery activities in federally declared disaster areas, operates the Individuals and Households Program, which can provide money for temporary housing as well as home repair and replacement, auto repair, moving and storage. The program is often the best source of help for those without insurance.
The agency has a detailed publication titled ''Help After a Disaster'' on its Web site, www.fema.gov, that helps families determine if they're eligible and allows them to register for grants.
FEMA generally sets up centers in disaster areas to process applications, but people in federally declared disaster areas also can apply by calling the agency's hot line at 800-621-FEMA (800-621-3362).
Getting government loans
The Small Business Administration, which provides loans to help small businesses rebuild, also coordinates the Home and Personal Property Loan Program. The program makes low-interest loans, currently 2.68 percent for up to 30 years, available to families who need extra money to rebuild.
''In a lot of cases that we've seen, losses exceed their insurance coverage,'' said SBA spokeswoman Carol Chastang. ''In some cases it's water damage. A lot of people make the assumption that homeowners insurance covers flood damage, and it doesn't.''
Chastang said loans of up to $200,000 are available for home repair and up to $40,000 to replace personal property, such as furniture and clothing. ''Renters can also apply for that $40,000,'' she said.
She said the best way for families to access the program was to register with FEMA. Families can find information about the SBA loan program at www.SBA.gov/Disaster.
J. Robert Hunter, a former federal insurance administrator who is director of insurance for the nonprofit Consumer Federation of America in Washington, D.C., said some families will be surprised to find they have to dig deeper into their pockets because of hurricane deductibles.
He said that after Hurricane Andrew devastated the Gulf Coast in 1992, many insurance companies added clauses so that homeowners are not only responsible for cash deductibles, say $500 out of pocket before their insurance kicks in, but also deductibles of 2 percent to 5 percent of the house's value if the damage is hurricane related.
''It's kind of buried in the paperwork at renewal, so some people are surprised when they submit claims,'' Hunter said.
There also may be policy limits on replacement costs, he said.
Hunter suggests that people who are not happy with insurance settlement offers first complain to senior staff at the insurance company. If the matter isn't settled, they should seek help from the state's insurance department. If they're still not satisfied, he said, hire a lawyer to pursue the claim.
Copyright 2005 Associated Press