Who gets the bill for battered beachfront?: The answer is complex, but taxpayers are ultimately on the hook [Destin Log, Fla.]

Dec. 26--A string of storms have crashed into Destin beachfront communities in the last few months, leaving some taxpayers wondering who gets the damage bill for battered beach houses and condos on the Gulf.

And there is a basis for concern, as most beachfront property owners are insured by the National Flood Insurance Program and Citizens Property Insurance Corporation. Both programs offer coverage to homeowners in high risk areas and have the potential to cost taxpayers money.

National Flood Insurance Program

According to David Forstrom, Destin city planner and stormwater/ floodplain manager, there are a total of 7,850 NFIP policies in force in Destin. While less than half of Destin is in a flood zone, the NFIP covers more than one and a half billion dollars worth of property in the area.

"Getting flood insurance is mandatory if you're in a flood zone," Forstrom said. "There are some private companies in the flood insurance business, but the large majority get their insurance through the NFIP."

The NFIP was created by Congress through the National Flood Insurance Act of 1968. For homeowners to participate in the program, which provides protection from losses from flooding to property owners in flood zones, a community must adopt and enforce a floodplain management ordinance to reduce the risk of future flood damage.

The intention of Congress was for the NFIP to be self-supporting, with operating expenses and flood insurance claims being paid using premiums collected for flood insurance policies.

However, in 2006, the Congressional Budget Office found that subsidized premiums, which are given to property owners whose homes were built before their community joined the program, were costing U.S. citizens $1.3 billion a year. And damage to repetitive-loss properties cost taxpayers about $200 million annually, according to Congress.

Repetitive-loss properties are homes in high risk areas that have sustained damage due to flooding on multiple occations. According to a map provided by Forstrom, Holiday Isle, which lies in a high-risk flood zone, is littered with repetitive-loss properties.

But J.J. Chambers, a Destin Pointe homeowner, said taxpayers are not getting a bill for every storm that comes through Destin. Storm surge has to reach 15 feet for coverage from the NFIP to be triggered, according to Chambers.

"It would take a pretty catastrophic flood event to trigger any coverage," Chambers said. "Dennis ran three and a half feet of water through our house, and they (NFIP) didn't cover one penny."

Chambers also noted that coverage through NFIP is extremely expensive. For a total of $350,000 in coverage, $250,000 for the structure and $100,000 for the contents, Chambers pays $7,600 a year. And he said that he'll be out of luck if there is damage to his land, as he cannot insure his property, only his dwelling.

"Without any coverage, you may be so wiped out from a flood that you can't really recover," Chambers said. "But even with coverage, I could lose my property."

Mary Hudak, a regional spokesperson for the NFIP, said that the program is generally self-supporting. She said that if the program is forced to borrow money from the U.S. Treasury in the event of a catastrophic storm season that depletes their reserve funds, they pay it back with interest. However, according to the Congressional Budget Office, it is "highly unlikely" that the program will be able to pay back all that it has borrowed, as its borrowing limit was increased to $18.5 billion from $1.5 billion after Hurricane Katrina hit the Gulf Coast.

Citizens Property

Insurance Corporation

Unlike the NFIP, Citizens Property Insurance Company is a state-run program. It was created by the Florida legislature in 2002 as the insurer of last resort. And like the NFIP, it is currently costing taxpayers money. According to John Kuczwanski, a representative from Citizens Property Insurance Com- pany, Floridians who don't live anywhere near the shore are being assessed a 1.4-percent fee on their insurance policies to pay for claims made by Citizens policy holders in 2005.

Insured Floridians will continue to be charged the 10-year assessment for seven more years.

"If we need additional funds, we assess Citizens policy holders first, then if that isn't enough, the assessment goes to outside policies," Kuczwanski said. "But it takes a very significant storm season to trigger those assessments."

Although taxpayers are currently paying for Citizens claims from 2005, David Sherry from the Surf Dweller on Okaloosa Island said that people are not filing too many claims with Citizens. He said the Surf Dweller has been insured by Citizens for their wind coverage since 2005, and their deductible is $600,000, meaning the condominium would have to be hit by a significant storm to receive money from Citizens.

"For 2010, I can tell you we're going back to a private carrier because it will save us $30,000 a year," Sherry said. "But there was a time after the 2004-2005 storms that a lot of private carriers pulled out of Florida. To my understanding, they (Citizens) were the only carrier for a time. But I think the 2004-2005 storms are far enough back in people's memories now that more private carriers are coming back."

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