1) Homeowners are finding it harder to obtain affordable insurance as premiums rise and coverage becomes more limited, especially for flood damage, as an active hurricane season is predicted. 2) The National Flood Insurance Program expired on June 1st, preventing new policies from being issued, which is delaying over 1,200 real estate closings per day. 3) Homeowners are urged to apply for flood insurance now despite the program lapse in order to have coverage retroactively once Congress extends the program.

1. Flood Insurance Gets Harder to Find - WSJ.com
Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or
customers, use the Order Reprints tool at the bottom of any article or visit www.djreprints.com
See a sample reprint in PDF format. Order a reprint of this article now
WEEKEND INVESTOR JUNE 19, 2010
As Hurricane Season Begins, Insurance Gets Harder to Find
By M.P. MCQUEEN
From the Gulf oil spill and the floods in Arkansas and Oklahoma to the procession of hurricanes forecast for this
year, the stage is set for major property damage in 2010.
Yet people looking to bolster their homeowners-insurance
protection are likely to find that premiums are pricier, and extra
coverage is harder to get, than ever before.
Government and private forecasters are predicting an active
hurricane season, which runs from June 1 through Nov. 30. But
insurers are selling fewer policies, raising premiums and
reducing or dropping wind coverage as far north as
Massachusetts, insurance industry spokesmen and agents say.
View Full Image
Getty Images
"The average price of a homeowner policy on Long Island is
A house rests atop a car in Lake Charles, La., after
Hurricane Rita—then a Category 3 storm—landed in above $2,000 a year now, and five years ago it was probably
September 2005. half that," says Thomas J. Crowley, an independent insurance
agent in Southampton, N.Y. "My own policy has doubled in five
years to over $3,000 a year."
Of particular concern this hurricane season: flood damage. Storm surges could bring polluted floodwaters from
the oil spill in the Gulf, potentially affecting property owners from Louisiana to Cape Hatteras, N.C.
But standard homeowners' policies generally don't cover pollution damage resulting from a flood; only
supplemental flood insurance does. "In general, whatever is mixed in with the water is part of the flood, hence
excluded from a [traditional] homeowner policy," says Robert Hartwig, president of the Insurance Information
Institute, an industry nonprofit group.
Finding Flood Coverage
Only one in five homes in a high-risk flood zone carries flood insurance—and new coverage is getting
increasingly difficult to find. Congress hasn't yet extended the National Flood Insurance Program, which is
administered by the Federal Emergency Management Agency and provides the vast majority of flood policies in
the U.S., after it expired on June 1.

2. Flood Insurance Gets Harder to Find - WSJ.com
As a result, no new NFIP policies and
renewals are being issued. The handful of
private companies that issue flood insurance
for high-end properties continue to do so.
Congress's failure to extend the flood
insurance program is delaying an estimated
1,200 real-estate closings a day across the
U.S., according to the National Association
of Mutual Insurance Companies. Federal law
requires homes with federally backed
mortgages in flood-hazard areas to have
flood insurance.
The House has passed an extension bill, and
federal officials say they believe Congress
will reauthorize the program eventually. New
policies would likely be retroactive—but
there is a 30-day waiting period after a policy is approved before it takes effect. So insurance experts urge
homeowners who need flood insurance to apply now despite the hiatus.
The average flood-insurance premium is about $570 a year for a $217,000 policy, according to FEMA, but it
rises to $2,000 for $187,500 of coverage in areas of high storm-surge risk. (For more information, go to
www.floodsmart.gov.)
People with high-end homes—generally those valued at more than $500,000—often have an easier time finding
insurance, but usually must pay handsomely for it. Privilege Underwriters Reciprocal Exchange, or PURE, sells
so-called high-value coverage in 14 states. ACE Ltd., Chubb Corp., Allianz SE's Fireman's Fund Insurance Co.
unit and the Private Client Group at Chartis, the property-casualty unit of American International Group Inc.,
offer it too, though some sharply limit policies in high-risk areas, or insure only recently built or second homes.
Such firms offer special coverage not generally available elsewhere. Many carriers sell excess flood insurance
above the NFIP's $250,000 limit. Some also sell personal flood policies with high loss limits like $15 million,
though generally outside of high-risk zones.
Specialist Referrals
Some firms, including Chubb and Fireman's Fund, also provide referrals to a network of experts with discounted
services, including arborists who can help identify weak trees and shore them up before storms hit. They also
may offer assistance in taking inventory of valuables and evacuating fine art and antiques. Chartis recently
introduced the services of its Hurricane Protection Unit to Martha's Vineyard, Cape Cod and Nantucket, Mass.
But these insurance policies cost an average of 20% to 25% more than those in the general market, brokers
say—and prices are rising. Hub International, the big broker, expects premium spikes of 8% nationally, with
double-digit increases in some coastal areas and 5% inland. One high-value home insurer recently told agents it
will raise premiums in Florida by 14%, although its rates will drop for condo owners and renters. (Florida, Texas
and Louisiana residents pay the highest premiums, according to the Insurance Information Institute.)
Dos and Don'ts
When examining or comparing insurance policies for hurricane-related coverage, it is important to make sure
that you have enough insurance to rebuild fully after a disaster. Check your policy limits to make sure they have
kept pace with additions and upgrades; insured values reflect rebuilding costs, not the market value.
Be sure to distinguish between "extended replacement cost," coverage that pays a percentage above the policy

3. Flood Insurance Gets Harder to Find - WSJ.com
limit, and "guaranteed replacement cost," which pays whatever it costs to replace insured property with like
materials—an important distinction for historical and custom homes.
Also, scrutinize policy deductibles and exclusions. In 18 states and the District of Columbia, home insurance
policies now have wind, beach or hurricane deductibles that are separate from the standard dollar deductibles
that apply for fire and other perils.
Depending on the insurer and state, hurricane and wind deductibles generally run from 1% to 5% of the home's
insured value. The owner of a $1 million home could pay a minimum of $10,000 for repairs before the insurer
pays the first dollar for hurricane damage. Also, in some coastal counties, homeowners may have to buy wind
coverage separately from special pools. (See www.iii.org for more information.)
Emergency Expenses
Next, look for how your home insurance policy treats emergency living expenses, in case you are displaced. And
choose coverage from a company that has received top financial-strength ratings from one of the financial-
ratings firms, which include Moody's, Standard & Poor's and Fitch Ratings.
Spending for quality coverage can pay off when disaster strikes, says Chari Hust, 55 years old, of Houston. Ms.
Hust, a registered nurse, and her husband, Bob, 57, a cardiologist, suffered major damage on their primary and
vacation homes in Sept. 2008, when Hurricane Ike pounded eastern Texas. The Husts' second home, on Lake
Livingston, outside Houston, had much of its roof blown off, exposing all the contents to wind-driven rain.
"We had to rip it down to the studs and get rid of the sheet rock and everything else," Ms. Hust says. "It was like
entirely rebuilding the house."
Her insurer, Chubb, paid about $400,000 in claims on that house, which was insured for more than $600,000.
Her primary home in Houston flooded, triggering a $64,000 claim under the National Flood Insurance Program
as well as a $140,000 claim for other damage under her Chubb home policy.
Ms. Hust says that unlike some of her neighbors, she and her husband had no problems settling claims. "You
may pay more," she says, "but if you have a catastrophe, it is worth having the right insurance."
Write to M.P. McQueen at mp.mcqueen@wsj.com
Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by
copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit
www.djreprints.com