Few S.E. Minnesota victims have flood insurance

MINNESOTA CITY, MINN. - For 44 years, Stan and Gerry Smith lived at 120 Minnesota St., one of the prettiest spots in their small town.

It was also one of the highest, so high that the Smiths never gave a thought to buying flood insurance.

In fact, not a single person in Minnesota City (population 235) has flood insurance.

Few homeowners in the affected area bought flood insurance, although nearly all could have, the Federal Emergency Management Agency (FEMA) reported Tuesday.

In the six-county area with 103,000 households, 718 carry federal flood insurance. In the two hardest-hit counties -- Winona and Houston -- 196 flood insurance policies have been issued for homes and businesses, according to a FEMA report.

"We will see more people sign up pretty soon -- we always do after extensive flooding," said Tom Lutgen, a hydrologist at the Minnesota Department of Natural Resources and the state's national flood insurance coordinator.

Homeowner's insurance does not cover flooding.

Statewide, 8,514 Minnesotans carry flood insurance, 627 of them in the six counties for which Gov. Tim Pawlenty declared a state of emergency.

"Flood insurance will be required of people who get federal low-cost loans or grants to repair or rebuild their flooded homes -- assuming the president declares this a disaster area," Lutgen said.

People who fix flood-damaged property by refinancing their homes also are likely to be required by lenders to get the insurance.

"There are a lot of misconceptions about flood insurance," Lutgen said, chief among them that a homeowner must live on a flood plain to buy it. "The fact is, 92 percent of Minnesotans qualify."

In Rushford, one of the hardest-hit areas, only two people have flood insurance, according to the FEMA report.

Larry Johnson, a Rushford City Council member, said he thinks the main reason residents, himself included, didn't have it was because they didn't think the area was in danger.

He noted that dikes in the region, built after 1965 flooding, were supposedly "lifetime" dikes. "Well, nature can come up with surprises," he said.

Communities must adopt FEMA standards, primarily using zoning to control development in flood-prone areas, Lutgen said. Outside of cities, county action is required.

The cost of flood insurance varies by proximity to flood-prone areas, type of structure and coverage -- typically as much as $250,000 for homes and $500,000 for businesses.

Those not on areas subject to 100-year floods may pay as little as $300 a year. In Stockton, the 20 people with insurance paid an average of $655 this year to buy an average of $108,355 in coverage.

Deciding whether to buy flood insurance is a gamble on what the weather will bring.

"There was no need," said Linda Goodfellow, who didn't because her Winona townhouse wasn't located in a flood plain.

After water bubbled up in her basement, Goodfellow called her insurance agent to see whether she was covered. The agent called back Tuesday and told her the bad news.

"I was looking at the carpeting; it wouldn't have cost that much," she said.

In Stockton since 1978, six claims have brought homeowners $81,380 in payments.

In all of Winona County this year, 186 policy holders are paying $133,100 for insurance. During the past 29 years, insured residents filed 59 claims and were paid $267,441.

Frustration and impatience

About 4,200 homes in seven counties have been affected by the flood, according to a preliminary survey by the American Red Cross.

Of those, 256 are completely destroyed and 338 have sustained major damage, said Susan Lasley, a Department of Public Safety spokeswoman. Another 454 homes have minor damage, 475 are still inaccessible and 2,676 houses were affected in some lesser way.

"These are very preliminary numbers," Lasley said. "We know they'll probably grow."

Kris Eide, the state's director of homeland security and emergency management, said the damage will surpass the $6 million mark needed for a federal disaster declaration.

The state is expected to ask President Bush for the designation by the end of the week, and during his visit to the Twin Cities on Tuesday, Bush said "a flood of help" will be directed to southeastern Minnesota.

Low-interest loans will be made available for repairs and rebuilding as part of the federal aid to flood victims.

But for some, waiting for a disaster declaration isn't providing help fast enough.

Frustrations bubbled over Monday when about 40 people gathered at the Winona County Government Center hoping to meet with FEMA representatives. When they found out they had been misinformed, they aired concerns to Pawlenty, who had just finished a tour of the area.

One woman wondered how she could pay for temporary housing when she owed a substantial sum on a mortgage for a home that was washed out.

Several others expressed concern about flood insurance. Most in the room didn't have it, but all were worried they might be left high and dry when it comes to replacing, repairing or refurnishing homes.

"We pay thousands in [homeowner's] premiums, and for what?" one resident said of insurance companies. "They've stolen our money."

Officials are overwhelmed

The frustration has overwhelmed local government officials, who are scrambling to bridge the gap between emergency help provided by the Red Cross and the anticipated long-term relief from federal and state aid.

Winona County administrator Bob Reinert said his county has long prepared for disaster.

"What we don't have practice doing is dealing with the aftermath of something like this," he said. "Hundreds of people have been displaced. Honestly, my heart goes out to all of them. If there is anything we can do, we will."

Reinert said FEMA representatives are expected to arrive later this week. Until then, local governments are trying to help out the best they can. Winona County has set up a help line for flood-related questions: 507-457-8858.

In Rushford, which was evacuated, residents were just starting Tuesday to be shuttled back to their neighborhoods with National Guard escorts.

One who hoped to go back was Amy Hundorf, who fled her home in the dark of night with her husband, Arlenn, and daughters April, 23, and Joy, 8.

"I know it's going to be bad," said Hundorf, adding that she doesn't know whether her family has flood insurance.

"I can't look at the policy because it's underwater," she added, chuckling. "I had all that stuff in a safe on the first floor and I'm sure it got wet. But when I get ahold of my insurance guy, I'll ask him. Right now, he's underwater, too."

In Minnesota City, Gerry and Stan Smith have spent a restless three days since leaving their house.

"I wake up early and I can't go back to sleep because I think about all we have to do," Gerry Smith said, tearing up. "I don't know. And that's what's so confusing. You keep thinking, 'How are you going to do this? What are you going to do?'"

Although their house never got wet, they've heard it will be condemned, along with those of several neighbors.

"I never had anything like this happen before," she said. "So you don't know where to begin."

Staff writer Tom Ford contributed to this report.