As if the slow, limited-resources relief effort immediately following Hurricane Katrina wasn't enough insult added to the injuries and death, hundreds of thousands of area home owners may have severe financial difficulties putting a roof back over their heads.

The Federal Emergency Management Agency estimates 1 million people were forced from their homes by the Gulf Coast storm and only an estimated 40 percent of the homes in the area were covered by flood insurance.

The typical home owners insurance policy covers a hurricane's wind and rain damage, but not flood damage or destruction, which, ironically, can wipe out evidence of wind and rain damage.

Home owners and property owners have a better chance of getting insurance benefits if their home winds up in a storm-blown heap rather than submerged with the roof intact. For home owners with submerged homes and no flood insurance, they are likewise sunk when it comes to rebuilding with insurance benefits.

Flood protection is provided by special insurance from the FEMA-administered National Flood Insurance Program.

The coverage became mandatory in 1973 for homes in a federally designated high flood risk zone within a flood plain when the home was purchased with a federally insured mortgage.

Spotty compliance and less than 30 percent of at-risk homes covered with flood insurance forced the National Flood Insurance Reform Act of 1994 which mandated that lenders demand the coverage before signing off on the mortgage.

Regional purchase moratoriums go into effect during certain periods, including just after flooding.

The Gulf Coast region's hurricane devastation area is dotted with older homes that are free and clear of a mortgage, predating the flood insurance requirement.

Even those covered by flood insurance may not get market replacement value. The basic policy covers up to $250,000 for the structure and up to $100,000 for contents. Businesses get coverage of up to $500,000 for buildings and contents.

FEMA can make loans to help those without flood insurance, and offer other financial benefits, but with Newark, CA-based Risk Management Solutions' estimated $100 billion in insured and uninsured losses, the cost could begin submerge both the insurance industry and FEMA.

That means huge FEMA loans from the U.S. Treasury and the possibility of another kind of wave, this one sending a ripple effect through the economy -- not just the Gulf Coast.

Katrina is likely to be the costliest natural disaster ever, experts say, amounting to paid benefit claims as high as $30 billion. Given the shifts in home owner insurance policy costs and coverage since the record $21 billion insurance payout after Hurricane Andrew in 1992 and subsequent big storms, home owners can expect more upward pressure on insurance premiums.

Homeowner insurance policies do typically have another life line some may overlook in their time of grief, fear and exhaustion. This coverage is available to those forced from their home -- even if they were evicted by flood waters. In fact, the coverage is not available under the flood insurance provision.

It's called "additional living expense" (ALE) coverage and it pays -- up to a limit -- the difference between what it cost the family for food and housing before their loss and what it costs after they were forced to evacuate because their home became uninhabitable.

The difference the mortgage-and-at-home-meals cost and motel- or hotel-and-restaurant-meals cost can be substantial. A typical policy provides coverage equal to about 20 percent of the amount of the insurance on the home. A home covered for $300,000, for example, would offer $60,000 in ALE coverage.

As soon as possible, home owners should contact their insurance agent or company and let them know Hurricane Katrina forced them from their home and learn what other coverage will give them some financial benefits.

Published: September 8, 2005

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.