A Second Disaster Strikes: Will FEMA Pay Again?

ADJUSTERSINTERNATIONAL.COM 3 • Beyond the NFIP (National Flood Insurance Program) insurance, property coverage was either not available or available in the amounts needed by applicants to meet obtain and maintain requirements. For example, one entity could obtain only 20 percent of the coverage needed and then only from Lloyd’s of London. • The cost of premiums for new or renewal policies, needed to comply with obtain and maintain requirements, increased three to 10 times . For one policyholder, pre-Katrina insurance coverage had been 3.52 percent or $35,200 per $1 million of coverage. Post-Katrina, the cost escalated to $125,000 per $1 million—a 284-percent increase —with less coverage and higher deductibles! • Deductibles rose from pre-Katrina ranges of 2-5 percent to 5, 10 or even 15 percent, thus transferring greater levels of risk to the applicants and their budgets. • Mandatory NFIP reductions ran to tens of millions of dollars for applicants where substantial damage occurred to their facilities in SFHAs (Special Flood Hazard Areas) — and the applicants had not purchased NFIP insurance for their buildings and contents prior to Katrina. The mandatory reduction penalty for each facility was often at the NFIP maximum insurance amount of $500,000 for the building and $500,000 for contents — a “hit” of $1 million per facility that seriously reduced or zeroed out the applicants’ Public Assistance grants before the first dollar of FEMA assistance reached them. • Anticipated wind and flood insurance assessments by FEMA also reduced applicants’ access to Public Assistance funding. Applicants are required to provide copies of property insurance policies to FEMA at the beginning of “Failure to meet this requirement means risking the loss of all Public Assistance funding for that facility or item if it is damaged by the same hazard again in the future.”