Policyholders get late surprise

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Christy Wilcoxen's home at 3516 Fourth Ave. in Council Bluffs isn't in a flood zone. It's a mile or more away from the Missouri River, and there's no standing water nearby.

But she values the house and its contents. With all the recent talk about levees breaking, predictions of months-long record flood levels and her neighbors buying flood insurance, Wilcoxen decided to call her State Farm agent to see if she could get coverage, too.

Yes, the agent said: From what we know, if you apply for a policy now, it would protect you after a 30-day waiting period.

So on Monday, the 60-year-old submitted her application and paid the premium, with a feeling of relief that if something happens after 30 days, she'll be covered.

Not so, the Federal Emergency Management Agency said in a memo dated June 6 — also Monday.

The agency, which oversees the federally backed flood insurance program, said that only insurance in effect before June 1 will cover damage from the current Missouri River flood, even if the damage takes place months later.

That's because, FEMA said, the June 1 release of water from the Garrison Dam in North Dakota triggered a “flood in progress” in the Missouri River Basin, which extends to St. Louis. Once a flood is “in progress,” the flood insurance rules say, only existing coverage will pay claims.

That apparently means no coverage for property owners who bought flood insurance after about May 1 in the states subject to the current flood, since the 30-day waiting period means their policies would not be in effect until after June 1.

Wilcoxen said she doesn't blame her insurance agent, who was trying to follow the rules and now says she can get a refund if she wants to cancel her application. And she doesn't dispute the 30-day waiting period, which is designed to discourage people from waiting until a flood is imminent to buy insurance.

But she thinks FEMA's June 1 cutoff decision is unfair and hopes Congress steps in to change it.

“They knew damn well the flood was going to be in progress,” she said. “They just don't want to pay the claims. It's not right. This isn't about Christy Wilcoxen. This is about Council Bluffs. Somebody's got to help us. Excuse me, I'm going to cry.”

FEMA, contacted about the issue, said it is applying the rules for coverage set out by Congress in the federal flood insurance law, which is designed to pay claims for people who purchased flood insurance before flooding began.

Insurance agents got the word just this week.

Keith Confer, a Farm Bureau agent in the Bluffs, has called a dozen or more clients who recently applied for flood insurance. “The coverage we thought we had, we don't have for this event. The people we tried to help the last couple weeks, who thought they were going to be OK, now we've got to tell them it's not going to work.”

Confer said some of his clients want refunds, some will go ahead with their applications and some haven't decided what to do.

He said he had been asking FEMA questions about the coverage dates so he could tell his clients the correct information, but it wasn't until Wednesday, June 8, when he got a copy of FEMA memos dated June 6 and May 17, that he knew the facts.

FEMA's May 17 memo said the agency had received questions about what would trigger a “flood in progress” exclusion and how that situation would work with the 30-day waiting period.

The memo listed several things that would trigger a “flood in progress,” including a breach in a levee or water being released from a dam. “FEMA does not interpret the ... exclusion as being triggered only when floodwaters physically touch the insured building,” the memo said, with the words “does not” underlined and in bold type.

The June 6 memo said the release of water at the Garrison Dam in North Dakota “triggered a flood in progress” on the Missouri River down to Gavins Point Dam at Yankton, S.D., and to “the basin beyond.”

Because the flood began June 1, the memo said, “for coverage to be effective for losses caused by the flood resulting from the water release from Garrison Dam, N.D., (a policy) must have been in effect prior to June 1, 2011.”

On June 1, the Army Corps of Engineers said, the Garrison Dam released water at the rate of 91,300 cubic feet per second into the river, part of an extended buildup of releases. The day before, the dam released at the rate of 85,500 cubic feet, and the day after, 105,000 cubic feet.

Congress put the 30-day waiting period in the 1994 flood insurance law to prevent people from buying insurance “at times of imminent flood loss.”

In response to a World-Herald inquiry, FEMA said it chose the June 1 release because an inspection by a representative of the National Flood Insurance Program of the area around the Garrison Dam showed that water conditions that day met the definition of a flood, according to the program's standard policies.

“For instance, the inspector identified conditions of partial or complete inundation of two or more acres of normally dry land area or of two or more properties from overflow of inland waters,” the agency spokeswoman said.

The agency said it will examine each claim individually because losses could be caused by flooding distinct from the flood triggered by the Garrison Dam water release. The agency said applications to increase flood coverage also are subject to the 30-day waiting period, which means that only coverage amounts in effect before June 1 will apply to damage from the current Missouri River flood.

Confer said most people who live in flood zones already have coverage, either because their mortgage lenders require it or they decided to get it on their own. Others bought even though their houses were not within the flood zones. Of those who applied recently, some live within flood zones and some do not, he said.

Confer said clients who applied for flood insurance recently are disappointed because they thought their new policies would cover damage that occurs after the 30-day waiting period. There's no way to tell a recent purchaser when a policy would take effect, he said, since the end of the current flood is uncertain.

“Who knows how long this flood is going to last, or whether there will be a levee breach?” he said.

Flood coverage of $250,000 for a house outside an official flood zone, with $100,000 for its contents, might cost $400 a year, he said. The same coverage for a house within a flood zone may reach $1,600 a year because of the higher risk of claims.

Wilcoxen said she contacted Iowa's U.S. senators about the issue, hoping for a change. The Washington, D.C., office of Sen. Tom Harkin, D-Iowa, said it is aware of the situation and issued a general statement on the flood.

Through his Sioux City, Iowa, office, Harkin said, “I will be doing all that I can to have the corps, FEMA, USDA and other federal agencies focused on preventing flooding and do all that they can for those that suffer damage.”

Contact the writer:

402-444-1080, steve.jordon@owh.com

twitter.com/buffettOWH

* * *

View the fast-moving floodwaters near Blair, Neb., shot by World-Herald Videographer Kyle Benecke. On Friday, it was a newly-planted cornfield, by Saturday morning the Missouri River had taken over.

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Watch Omaha city officials explain flooding precautions taken regarding the water treatment facility.

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