Government Flood Insurance Program Called into Question

Sept. 20, 2005 — -- More than 100,000 Gulf Coast homeowners who are expecting help from the federal flood insurance program may be in for a bitter surprise, according to victims of a hurricane that hit the state of Maryland two years ago this week.

"Pennies on the dollar.  And they'll be unable to rebuild their homes and lives just as victims from numerous storms across the country have been subjected to for the last years," says Steve Kanstoroom, founder of FEMAINFO.us, a Web site advocating for flood victims, including those whose homes were damaged when Hurricane Isabel triggered a flood surge in the Chesapeake Bay.

Flood insurance is available through the National Flood Insurance Program, which is run by the Federal Emergency Management Agency.   More than 4.5 million people pay premiums to be covered up to a maximum of $250,000.  Residents have to pay extra to cover household goods. 

"My first thing was, 'We have flood insurance,'" recalled Jennifer Dieux of Shady Side, Md.  Her home was hit by the Chesapeake Bay flood surge.  "It's not going to matter.  We're covered.  We're going to be fine," Dieux remembers thinking.

Two years later, Dieux and her family are still living in a government-provided camper parked in front of their flood-ruined home, which they cannot afford to fix. 

 While mold and mildew have spread up the walls to the ceiling, the flood insurance program only pays to replace those portions actually touched by the storm's water. 

 Adjusters offered $44,000 for the necessary repairs.  Builders say $115,000 is needed to restore the home to its pre-flood condition.

 "We have no savings, nothing," Dieux admits.  "We have no way to pay for it."

 Maryland Insurance Commissioner Alfred W. Redmer told ABC News that FEMA adjusters systematically low-balled the losses of Maryland flood victims.

 Eileen Thaden, also of Shady Side, can attest to that.  Although she paid premiums for full coverage, FEMA adjusters offered $99,000 for repairs, which she says will cost $250,000.