Not All Storm Damage Claims Will Be Paid, Carriers Say

Fearing the coming El Nino storms, more than 70,000 California homeowners purchased federal flood insurance in the last three months of 1997.

But some damage from the recent storms may not be covered under the National Flood Insurance Program, industry officials said Wednesday.

Basically, the federal flood insurance covers homeowners who suffered damage from mudslides. But policyholders who suffered damage from landslides may be out of luck.

And experts couldn’t agree on what happened in flood-ravaged sections of Laguna Beach this week.

A mudslide occurs when a flood of water carries mud and dirt along the surface of the ground, damaging or demolishing a house. Most mudslide damage is covered under federal flood insurance.

A landslide is when houses are moved because the earth underneath has shifted.

“There’s been some confusion,” said Ray Lenaburg, deputy federal coordinator for the Office of Mitigation, which is handling the damage in California.

A “liquid mud flow” over the ground that damages a house is covered by National Flood Insurance, Lenaburg said. “But if it is below ground and it is so saturated that it starts to move--that is a slide that is not covered,” he said.

Lenaburg said many of the property owners who suffered damage in Laguna Beach could be eligible for payment of their claims.

“What we saw on the news in Laguna Beach--that was a liquid river of mud if ever I saw one,” and should be covered, he said.

But Brandon Shamim, spokesman for State Farm Insurance Companies, said much of the damage he has heard about in Laguna Beach resulted from landslides--the earth moving underneath property--and might not be covered.

“What happened in some areas in Laguna is the land underneath the home started to erode,” Shamim said. “Unfortunately, they are not covered by flood insurance. There are a lot of unfortunate folks.”

Despite the uncertainty, industry officials advised homeowners to file claims.

A total of 43,197 claims for nearly $50 million have been filed with insurance companies in California since the storms began in January, according to Shamim and Kenneth Adams of the Western Insurance Information Service in Los Angeles.

Federal flood insurance, which supplements homeowners insurance, is available to residents of federally mapped areas that are prone to floods.

Homeowners policies cover damage that occurs during a storm, such as windblown shingles or broken windows. Federal flood insurance is needed to cover damage done by water after it has hit the ground--damage from swollen rivers, flash floods or rivers of mud.