In the world of home insurance, floods are quite the contentious issue. A home is not protected from a flood, even with a home insurance policy. Flood insurance does exist, but it operates completely separately from home insurance.
As flood insurance protects primarily the home from the damage that occurs as a result of a flood, it would seem natural for floods to be covered under a standard home insurance policy, but they are not.
Another problem with this division in insurance is that it is not common knowledge. Because the combination of the two types of insurance seems so expected, many people do not know that their home insurance does not, in fact, cover flood damage. They only find out when they file a claim for flood damage and it is denied because their policy does not cover such claims.
From of perspective of insurance companies, floods can be extremely costly and the damage is often extensive and difficult to repair. Obviously, this is also a problem for the customer who has to pay for these damages out of pocket.
Another issue for insurance companies is that floods are both seasonal and regional but to a greater extent than other natural disasters. Some regions flood annually while others flood sporadically. But almost all regions have the opportunity to receive the full force of a powerful flood.
Only some regions are prepared for these dramatic events in terms of the structural integrity of the home and the preparedness of the residents for such a disaster.
Different regions in the United States have their rainy seasons at different times, and even parts of the country that are known for their good weather have bouts of extreme rain which they are completely unprepared for.
However, there is a government program called the National Flood Insurance Program that works as a part of FEMA. The NFIP provides a basic but fairly comprehensive form of flood insurance. And for certain regions where floods are particularly prevalent and especially potent, flood insurance is required.
After Hurricane Katrina truly devastated parts of the South, namely Louisiana, flood insurance became more paramount but also more expensive because of all of the damage that was done.
But in the end of May of 2012, the authorization for the National Flood Insurance Program expires and is up for renewal in Congress. Unfortunately because of current political tensions, this program may not be renewed. To some people it is considered an additional ancillary and superfluous cost.
In 2005, the NFIP accrued massive costs because of the wreckage caused by Katrina, and its after effects. And now that every part of the country's budget and every expense is being scrutinized, every government program is being put under a microscope and their necessity is being questions.
But when floods are a constant problem and have the potential to cause horrible damage, a government program that helps clean up the wreckage and helps people recover seems to be a fairly necessary concept.