Is flood insurance like money down the drain?

In John Sheppard’s 35 years in Long Beach, he’s never seen much in the way of dramatic flooding. Heavy rains and clogged storm drains, certainly, but not the sort of catastrophic 100-year flood that would warrant the mandatory federal flood insurance imposed upon him from 1998 to 2002. This is the first winter in five years that Sheppard, who owns a two-bedroom, one-bath home built in 1950, hasn’t had to pay about $300 annually for flood insurance.

Luckily for Sheppard and more than 130,000 other residents of Long Beach and nearby communities in Southeast Los Angeles County, mandatory flood insurance ended a year ago with the completion of the Los Angeles County Drainage Area project along the Los Angeles and Rio Hondo rivers.

But thousands more Southland homeowners, coastal and inland, remain in federally mandated flood zones and must pay annual insurance premiums ranging from $300 to $1,000.

Even if you’re not David Geffen’s beachfront neighbor in Malibu, or you’re so far inland the only time you see the surf is on “Baywatch” reruns, you still may reside in a flood plain. Pockets of flood zones pepper the Southern California landscape. Steep canyons that experience heavy runoff after winters rains, including areas in Topanga Canyon, San Gabriel, Altadena, Malibu Lake and the Santa Monica Mountains are mandatory coverage areas, according to Geoffrey Owu, an associate civil engineer for the L.A. County Department of Public Works.

Although Los Angeles County is a semiarid region that receives on average less than 15 inches of rain per year, some of the mountain areas receive more than 40 inches. Years of drought and sporadic rainfall periodically yield to El Nino downpours that tear shrubs and trees from parched hillsides, resulting in mudslides, plugged storm drains and flooded streets. And beachfront homes and condos from Santa Barbara to San Clemente can turn into breakwaters during harsh storms.

Six times in the last 121 years, Los Angeles rainfall totals have exceeded 30 inches, more than twice the annual average. The most recent 30-inch deluge in the 1997-98 season resulted in significant regional flooding.

In Laguna Beach, for instance, a wall of mud plowed through narrow Laguna Canyon Road, killing two people and forcing the evacuation of eight homes. And in Malibu, heavy rainfall caused an ocean cliff to buckle and one home to collapse. In both areas, flood insurance was mandatory.

To clarify, flood insurance is required only if there’s a mortgage on a house in a mandatory area. If the house is paid off, the owner isn’t required to buy flood coverage.

A mandatory flood policy purchased from conventional insurance carriers such as Allstate or Travelers Insurance is actually a federally backed policy from the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Agency (FEMA). Most of the premium is funneled to a FEMA-managed fund, which is used to finance disaster-relief efforts across the nation.

Technically, the NFIP expires Tuesday because Congress failed to renew the program before adjourning in November. However, U.S. Reps. Michael G. Oxley (R-Ohio) and Barney Frank (D-Mass.) said they will introduce legislation to reauthorize the program.

The majority of homeowners aren’t required to buy flood coverage -- and they don’t. Long Beach insurance agent Ron Schwab estimates that his office wrote from 30 to 40 flood insurance policies before the federal requirement was lifted in that area. Now they have “three or four” policies.

Since the standard homeowners policy doesn’t cover flood damage, an extra policy may be worth the added expense, according to FEMA and insurance industry officials.

“If you get wiped out by a flood, your homeowner’s insurance won’t pay anything,” said Ed Charlebois, head of flood insurance for Travelers. “If water rises up [into your home] from a creek, a river or the ocean, that’s viewed as flooding and won’t be covered.”

Flood insurance coverage typically goes beyond natural disasters. For instance, it will cover a sewer line that backs up into your bathroom and drenches the carpet.

Charlebois’ argument could be dismissed as an insurance industry scare tactic, but federal officials agree that flood insurance makes sense for many homeowners. “People who live in flood plains sometimes believe they’ll get disaster assistance if they’re flooded, but the vast majority of floods aren’t presidentially declared disasters,” said FEMA flood planner Michael Shore.

In Southern California, not all coastal towns are subject to mandatory insurance.

“We’re in a moderate or minimal flood-hazard zone, and flood insurance isn’t mandatory here,” said Howard Fishman, risk manager for the city of Manhattan Beach. “It boils down to two words: storm drains. We have some steep streets, but our storm drains capture the water from heavy rains.”

Some homeowners in flood-prone areas adopt the better-safe-than-sorry philosophy and buy flood coverage. .

“I bought it voluntarily because I thought there was a real [flood] risk,” said Downey homeowner and former City Council member Diane Boggs, who bought the insurance for her previous home, which was was in a flood plain. “It was during the El Nino years.”

Some homeowners, such as Long Beach resident Joe Sopo, consider the insurance a thinly veiled “flood tax” designed to fatten the Feds’ disaster relief pot.

“We referred to it as a flood tax, not flood insurance,” said Sopo, a real estate agent. “Sometimes you feel like you’re subsidizing those people you see in the news where one of the major rivers in the Midwest has flooded,” said Jeanette Gavin, president of the Belmont Shore Residence Assn.

Her Long Beach neighborhood of about 3,000 homes, located near San Pedro Bay, is required to have the insurance. Other homeowners disagree with the flood-tax conspiracy theory. “These were engineers, not politicians,” who built the flood models of the L.A. Basin, Boggs said, and they weren’t concerned with fattening FEMA’s disaster fund.

Faced with high premiums, Charles Wolter learned during a city-sponsored flood insurance meeting that Belmont Shore residents could slash premiums by having their properties surveyed. The surveys showed that more than 30 homes were above the flood plain. Their insurers, after receiving this information, switched the homeowners to discounted “preferred risk” policies.

“As a group, we saved over $10,000,” Wolter said.

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Jeff Bertolucci is a freelance writer in Agoura Hills.