Should evacuees be reimbursed?

This question touched a nerve after Hurricane Gustav and it's timely once again: Should people be reimbursed for the cost if they're forced to evacuate?

Blogger "JLP" posed it to readers of AllFinancialMatters in September 2008 after seeing a TV news report in which most people responded in the affirmative when asked if the government should reimburse people who had to flee. Then he offered his own view:

We already have a system in place to help those who can't afford to evacuate so I hardly see the need to reimburse everyone else. If you don’t like evacuating, then I'd suggest moving away from the coast.

Another reader said the idea was akin to expecting the government to reimburse you for the cost of keeping your sidewalks clear after a snowstorm. But reader Terry said it wasn't cut and dried:

If an evacuation is voluntary, government shouldn't pay for it. But if evacuation is mandatory, there is a case for reimbursement.

But hold on, you might think, isn't that what my homeowners policy is for? Won't it cover my expenses if I'm subject to a mandatory evacuation order?

As in most matters involving home insurance and disasters, it's complex and involves several factors:

• What type of disaster strikes.
• Where you live.
• Whether the evacuation was mandatory or not.
• What's included in your policy, including "additional living expenses" or "loss of use" coverage. (Note: If your home is actually rendered uninhabitable by the disaster, other rules apply.)

For instance, we found several states where reimbursement by the insurance company for evacuation expenses is common if you're required to flee in case of wildfire -- including California, Kathy Kristof says. Post continues after video.

Arizona appears to be another one. "Under a typical homeowners policy, if the civil authorities ask you to evacuate, you are covered," Wes Thew with Flagstaff Insurance told azdailysun.com after wildfires drove northern Arizona folks from their homes. "It is a very common type of coverage. A vast majority of the policies, if not all, has this type of coverage."

But that doesn't mean your disaster evacuation will be covered too. The Florida Insurance Guaranty Association says:

Consult your policy for this coverage. Generally, voluntary evacuation expenses will not be covered by your insurance policy, and only under certain conditions will mandatory evacuation expenses be covered.

And this, from the Texas Department of Insurance website:

It depends on your particular policy. Some policies may provide coverage if a civil authority prohibits you from use of the residence premises as a result of direct damage to a neighboring premises caused by a covered peril. (Emphasis added.) This coverage is generally limited for a period of up to two weeks. You should contact your agent or company regarding your specific policy.

Also, The Galveston County Daily News said the Texas Windstorm Insurance Association decided last year not to reimburse folks who were forced to flee the coast because of an approaching hurricane. It added that "very few private insurers pay for evacuation expenses because the industry would pay tens of millions of dollars to policyholders whether hurricanes caused damage or not."

What about flooding? Regular homeowners insurance doesn't apply here and neither does flood insurance, according to the federal flood insurance website.

Will the Federal Emergency Management Agency help out with evacuation costs? It may reimburse evacuees in limited circumstances. But this report in The Times-Picayune of New Orleans observes that evacuees without means can use emergency public transport and shelter. (FEMA does reimburse state and local governments for some of those costs.)

There is a circumstance where the federal government will cover your evacuation costs -- if you live within range of a nuclear accident. Federal law limits the liability of the nuclear power industry to the first $12.6 billion in damages in such an event, CNNMoney reports. After that, the taxpayers pick up the tab.

The act that created the cap, known as Price-Anderson, said that federal and state governments will step in and cover "bodily injury, sickness, disease or resulting death, property damage and loss as well as reasonable living expenses for individuals evacuated" in the event of a disaster, according to the NRC's Web site. Because the losses are covered by the government, homeowner insurance policies won't cover any of the damages.

If authorities forced you to evacuate as Hurricane Irene bore down on the East Coast, what should you do? Keep all receipts and contact your insurance company. Everyone else, check your homeowners policy now. And add this to your list of reasons why you should have an emergency fund.

One other point to keep in mind: If your insurance covers your expenses during a mandated evacuation, it's not a blank check to live high on the hog. If you're covered, your policy has limits on how much you'll be reimbursed.

Now back to the original question: Should the government reimburse all who are required to flee a natural disaster?

More on MSN Money:

• Post-Irene: How to file an insurance claim
• Goodnight, Irene. Is my damage covered?
• 5 ways flood insurance may soak you
• Will your insurance cover hurricane damage?
• What if you got hit by a bus?
• Insurance stocks celebrate a weaker Irene