How Flood Victims Can Get Financial Help

It may take weeks before most residents of Baton Rouge, La. and the surrounding area can return to their homes and businesses following recent catastrophic flooding. The heavy rains have resulted in the deaths of at least 13 people, required the rescue of 30,000 people, and damaged an estimated 40,000 homes.

Those who bought federally-backed flood insurance through the National Flood Insurance Program are at an advantage. Last week, the Federal Emergency Management Agency, which runs the program, directed the insurance companies that service its flood policies to begin providing individual policyholders in Louisiana with up to $5,000 in advance payments toward fixing home damage and another $5,000 toward replacement of home contents.

Policyholders can get those funds even before they submit documents showing what they lost. They also can get up to 50 percent of their claim paid out after an adjuster's inspection but before a proof of loss document is signed, says Rafael Lemaitre, a FEMA spokesman. "The idea is to get money into the hands of survivors more quickly," he says.

According to FEMA, a minority of flood victims—about 42 percent of residents in areas deemed high-risk—have active policies for flood insurance. Traditional homeowners and renters policies do not cover damage from flooding. Victims without flood coverage, either from the federal government or private insurers, will have to rely on their own savings—and on federal, state, and charitable funding—to recover and rebuild.

FEMA says it already has paid Louisiana flood victims $3.7 million in federal disaster assistance unrelated to its flood insurance program. Whether you have flood coverage or not, there are common steps victims can take now to ensure they get the most financial help later.

Make a Claim Now

Apply online for federal disaster assistance. You could be eligible for a federal grant of up to $33,000, to be used toward temporary housing, emergency home repairs, and other urgent measures. Both homeowners and renters are eligible. FEMA recommends you apply now, even if your parish has not yet been federally declared for individual assistance. You'll need to provide the Social Security number from at least one member of your household, and have an estimate of your family's gross household income at the time of the disaster.

If you left cars, boats, and other insured vehicles in the affected area, contact your auto insurer to begin a claim. Unlike homeowners insurance, the "comprehensive" portion of your auto insurance does cover flood damage.

Contact the insurance agent or company that sold you your homeowners, renters, or mobile-home coverage to make a claim. While homeowners insurance doesn't cover flooding from rising water, it does cover water damage from, say, a leaking roof. Considering the driving rains that inundated the region, some homes may qualify for homeowners insurance payments toward such damage.

If you are covered by flood insurance, in addition to applying for federal disaster assistance, contact the person or company that sold you your flood insurance policy. Your first contact, called a first notice of loss, starts the claims ball rolling, including your eligibility for the FEMA advance payments.

Those advance payments are up to $5,000 for your building's contents, and up to $5,000 for the building itself. To qualify, you'll have to have at least that much flood coverage. You'll later need to prove you had losses that high.

Keep in mind when you apply for the $33,000 in federal disaster assistance that these funds are for losses that aren't covered by your flood insurance policy.

Tally Your Losses

Keep track of expenditures related to temporary lodging and other expenses related to living away from your home. You'll need proof of that spending when applying for the federal disaster assistance.

If you have heard through the news or from neighbors that the first floor of your home suffered damage, begin creating an inventory of the contents. Write down the major items you can remember first and don't sweat the small stuff initially; adjusters have a system for estimating the value of, say, the items typically stored under a kitchen sink.

While flood coverage does cover major mechanical systems in the basement like the electrical wiring, water heater and furnace, it doesn't insure most personal items stored in a basement; check FloodSmart.gov for details.

Keep Records

Once you're able to get to the property, photograph everything, including objects you have to discard, structural damage, and marks on walls showing how high the flooding reached. You can then go back again to find electronic—and perhaps paper—records of major purchases. Hold on to all your records to give to your auto insurance adjuster—and possibly your homeowners adjuster, if it turns out you're eligible to make a claim.

You'll need these records for your taxes, as well. Depending on their severity, you may be able to deduct a portion of losses not reimbursed by insurance on your federal tax return. (The IRS, by the way, already has announced that certain tax deadlines, including the October 17 deadline to file tax-return extensions, have themselves been extended to January 2017 for residents in the federally-declared disaster areas.)

Check FEMA's disasterassistance.gov page regularly for updates. On the "Find Assistance" page, you can enter your information and see what assistance is available. FEMA says it already has provided $3.7 million in such assistance.

If you have flood insurance, provide your tally of losses to the adjuster assigned to you. If possible, get the adjuster's cell phone number or email address so you can both document the losses electronically and keep track of any correspondence. You can add to your claim later if more damage is discovered, says Keith Brown, CEO of Aon National Flood Services, the nation's largest processor of flood insurance claims.

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