Coverage under the nation's flood insurance program will change as October 1st, a long-planned event not directly related to Hurricanes Katrina and Rita, but one that will substantially impact those most likely to be flooded in the future.

Until this point the National Flood Insurance Program (NFIP) has provided three basic levels of coverage :

• Owner-occupants could obtain as much as $250,000 for property damage plus $100,000 for lost contents.

• Tenants could insure personal property for as much as $100,000.

• Investors could get coverage of up to $500,000 per property, a figure which includes both damage to the structure as well as contents.

Depending on where you lived, maximum residential coverage for the structure and contents ranged from $703 to $1,822 per year. Less coverage was also available with lower annual premiums.

The problem with the program's long-term approach is that while coverage was fairly equivalent, claims were not. For instance, one study done by the National Wildlife Federation found that 5,629 homes had 19,979 flood insurance claims.

These homes had a gross value of $307.5 million -- but because of repeated claims owners obtained flood insurance payments worth $416.3 million. That's right -- insurance coverage was more than $100 million greater than actual property values.

The problem of repetitive losses structures is huge. Essentially the current insurance system encourages folks to build again and again in the same way and in the same spot where they have previously been inundated.

"About 1 percent of the 4.4 million properties currently insured by the program are considered to be repetitive loss properties," says the General Accounting Office. However, this magical 1 percent produces about 38 percent of all program claim costs, $4.6 billion since 1978.

In other words, a lot of people overpay for flood insurance to assure the coverage of those most likely to be inundated. Seen the other way, those most likely to be flooded are paying less than they should.

As of October 1st, however, program rules will change. Under the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004 -- legislation signed into law in June 2004 -- owners with flood insurance will get a chance to upgrade risky properties. If they don't, insurance premiums will soar.

Under the new rules :

• A "severe repetitive loss property" is defined as a structure with one to four units with four or more separate flood insurance payments exceeding $5,000 each or a total of more than $20,000 in claims. A property with two claims which together exceed the value of the property is also defined as a "severe repetitive loss property."

• Grants will be available for elevating risky properties, relocating them to higher ground, demolishing properties prone to flooding, flood-proofing risky properties and buying them outright.

• Owners of flood-prone properties can decline such offers and have a right to appeal "repetitive loss" designations.

• Premuims will increase 150 percent above current flood insurance rates for those who refuse to mitigate.

• If a damage claim to a property exceeds $1,500 and the property owner has refused mitigation, the insurance premium will again increase 150 percent.

The plain purpose of the new flood insurance standards is to target those properties most likely to produce claims -- and to force owners to either improve what they own or to pay more for flood coverage.

That seems both logical and fair.

The new flood insurance rules are surely a better approach than the old standard if only because they target the properties most in need of mitigation. That said, there are several issues to consider:

First, it's difficult to imagine that many beach-front structures -- no matter how elevated or flood-protected -- can be defended in the face of Katrina, Rita and storms of similar size and power. It may be that we are entering a new era of hurricane activity, one that will cause even further changes in the construction and insurance of beach-front property.

Second, beach-front structural improvements without wetland and barrier island re-development are useless. Unless we get serious about coastline ecology, it's easy to see where taxpayer money will be washed out to sea.

Third, what about those impacted by Katrina and Rita? Will homes destroyed by these hurricanes be instantly defined as "severe repetitive loss" properties? If yes, one can assume that virtually all Gulf Coast owners will accept mitigation or buy-out offers.

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