Insurance agents along Missouri River complain FEMA creating confusion

KANSAS CITY, Mo. -- Insurance agents in states along the swollen Missouri River basin say federal officials are causing widespread confusion among property owners by pushing the sale of flood insurance policies that might not cover damage from the river flooding that began this month.

The insurance companies say that officials with the Federal Emergency Management Agency, which administers the national flood insurance program, are still urging private agents to sell the insurance even though the policies contain deadlines that appear to exclude the Missouri River flood damage. The federal officials explain that some of the damage along the river might still be covered under the program's highly complicated rules, but how much won't be known until after the flooding is over.

"They won't give you a clear answer," said Larry Case, executive vice president of the Missouri Association of Insurance Agents. "It causes issues for agents because they get frustrated when they can't give policyholders a definitive answer."

The questions primarily affect property owners who waited until recently to decide on flood insurance because their property usually doesn't flood. The extensive flooding this year -- the worst since 1993 -- is threatening thousands of acres that normally remain dry. The federal government has been encouraging more property owners along the river to make longer-term commitments to insurance.

"We've got to communicate with people that you can't wait until the last minute to buy flood insurance," said Brad Kieserman, FEMA's chief counsel.

The number of landowners who bought policies that may or may not cover the Missouri flooding is not known. Towns, homes and farmland in North Dakota, South Dakota, Nebraska, Iowa, Kansas and Missouri are underwater or threatened by the flooding, which began earlier this month and is expected to continue for another two months.

The confusion about coverage mostly stems from a 30-day waiting period in flood insurance policies. According to FEMA, the Missouri flood officially began June 1, so only policies bought by May 2 would have gone into effect and therefore would cover the resulting damage. On June 1, the U.S. Army Corps of Engineers increased water flow through the Garrison Dam in North Dakota to relieve pressure from torrential rains and heavy snow melt.

But the agency has continued to encourage people downstream to buy the insurance, noting that some damage might later still be covered if it is attributed to locally heavy rains or other conditions not affected by the waiting period. Property owners could buy the insurance, then wait for an adjuster to decide whether any damage is covered.

"When you have basin-wide flooding like we're experiencing this year and like we experienced in 1993, June 1 is not going to be the date that every individual policyholder is going to be held accountable for," Kieserman said.

But many homeowners, already strapped in a tight economy, may be reluctant to pay for insurance without a guarantee that it will cover their losses.

Bob Skow, executive director of the Iowa Association of Insurance Agents, said he and his counterparts along the Missouri River are being deluged with questions.

"I'm getting calls every day," Skow said. "People are clearly frustrated. The farther down the Missouri River, the more this is the case because these people, in many instances, haven't seen any flooding."

Roger Bruning thought he was doing the right thing in early June when he bought a flood insurance policy for his home in Orrick, Mo., a half-hour east of Kansas City, even though he hadn't seen water near his property since his basement flooded in 1993.

The retired schoolteacher said his agent told him the policy would be in effect if a flood hit, then contacted him a few days later to say it wouldn't.

"I would have bought it earlier, but I didn't know anything about this flood," he said. "We didn't have a concern in the world. We didn't know they were going to be dumping that water."

Bruning's insurance agent, Richard Wharton in Excelsior Springs, Mo., said he became alarmed when FEMA declared June 1 as the starting date of the flood, which set the May 2 cutoff date, because he had been telling clients they would still be covered.

"It caught us unaware," Wharton said.

U.S. Sen. John Hoeven, a North Dakota Republican, said many people thought they had more time to secure coverage.

"People who are not in the heart of your flood plain didn't have insurance because they never had been flooded," said Hoeven. Hoeven said many property owners believe FEMA should have provided more information earlier.

Before the 1993 flood, the waiting period before policies went into effect was only five days. That was increased to 30 days because lawmakers wanted to keep people who hadn't contributed to the insurance pool from waiting until a flood was imminent before buying coverage.

"I do have some sympathy to the argument that you can't go for years without flood insurance and then when you're told a flood is on the way go out and buy it, then assume you've got a product that will actually work," said U.S. Sen. Roy Blunt, a Missouri Republican. "You have got to have some common sense here or these flood insurance programs won't work."