Another Colorado disaster: No flood insurance

Most of the state's residents don't have coverage for the devastating damage that ruined thousands of homes and businesses.

By Bruce Kennedy Sep 19, 2013 3:15PM

Water flows through an evacuated neighborhood after days of flooding in Hygeine, Colo., Sunday Sept. 15, 2013 (© Brennan Linsley/AP)For Colorado residents who survived the state's recent devastating floods, a new disaster is unfolding. Even as the skies clear and they dig out the mud and debris, most Coloradans are finding themselves financially boxed in by a widespread lack of flood insurance.

The Associated Press, examining both FEMA and Census statistics, says only about 1% of Colorado homeowners have flood insurance policies.

Until this month, flood insurance was probably the last thing on the minds of many Coloradans, especially because their state has been in the depths of a drought that, in some places, has gone on for more than a decade.

"These are rare events so people think, 'It's not going to happen to me,'" Robert Hunter, director of insurance for the Consumer Federation of America, said in an interview with USA Today. Hunter ran the federal National Flood Insurance Program (NFIP) in the 1970s, and he estimates only 10% to 25% of homes in Colorado's high-risk flood areas have the proper coverage.

In Boulder and Larimer Counties, where flooding damaged or destroyed over 7,200 homes and businesses, experts say people with extensive damage and no flood insurance will have few financial options besides low-interest government loans or charity donations.

"It's really a heartbreaking situation for these people," Eric Weedin, an insurance agent based in Larimer County, told AP. "A lot of people don't have the assets or the savings to repair their house."

The standard home insurance policy does not cover flooding. And following the huge flood damage claims from Hurricane Katrina in 2005 and Superstorm Sandy last year, Congress passed the Flood Insurance Reform Act of 2012, which calls on FEMA and other agencies to change how the NFIP works.

One of the act's key provisions was for NFIP to raise its rates "to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders."

FEMA says those changes "will mean premium rate increases for some -- but not all -- policyholders over time."

And flood insurance policies can be very specific and exclusionary. Josh Landwehr, who works in the insurance industry, had floodwater and sewage ruin the basement of his home in Boulder. He doesn't have flood insurance, but he told AP it wouldn't have helped anyway because that kind of policy "only covers water that comes through the front door," and not up from the ground, as in his case.

More on moneyNOW

Sep 19, 2013 3:46PM
My flood insurance was buying a house on top of a really big hill.  If the water hits my house, I'll be looking for Noah to float by so I can hitch a ride.
Sep 19, 2013 8:45PM

Where is the free market?  Shouldn't it be running in to find a way to prevent this?


Also, how  do folk in Colorado get home loans w/out flood insurance, assuming they are in a known flood risk area?  Hasn't it been over a decade that most loans required it if in such an area.

Sep 21, 2013 12:34AM

I can't understand why folks in flood areas don't build their homes on stilts?  Would make alot of sense (with garage underneath)

Sep 22, 2013 9:04PM
I suppose the government will give money away again. Because people do not think ahead. This flood is just like hurricanes. Everybody should insure themselves. Just like I had plenty of storm damage with insurance that I paid for. A tornado everybody might have is unforeseen.
Sep 19, 2013 5:15PM
Let us review what was said in the wake of Katrina and apply it to this disaster, and this POTUS:

Obama caused the weather patterns that made it rain so much.
Obama probably blew up some dams to purposely flood the homes of white folks.
Obama doesn't care about Boulder because he hasn't even toured the disaster area yet.
Obama must hate white people.
Boulder will be rebuilt as a "vanilla city".

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