Oroville brings flood of insurance interest

Feb. 15--Although mandatory evacuations have ceased for Butte County residents near a damaged spillway at the Oroville dam, questions are being raised about flood insurance in preparation for a storm that could unleash a torrent on nearby communities later this week.

The problem is that for Oroville residents, it may too late to acquire flood insurance that would cover the immediate threat, said Edith Lohmann, a national flood insurance specialist with the Federal Emergency Management Agency. With few exceptions, flood insurance plans take a month to go into effect, Lohmann said.

"There is a standard 30-day waiting period before a flood insurance policy goes into effect, so we encourage people to talk to their flood insurance representative early," Lohmann said.

The Oroville situation has caused a number of concerned residents to reach out to flood insurers throughout the state. For some, that means purchasing a flood insurance policy through the federal National Flood Insurance Program, which is managed by FEMA. The federal system does not have specific state branches and instead has residents acquire the insurance through a list of approved companies.

As of Dec. 31, FEMA was enforcing 33 flood insurance policies in Oroville. In total, the policies covered over $10 million and cost policyholders around $45,051 a year. The greater Butte County enforced 1,630 flood insurance policies that covered nearly $379 million and cost policyholders almost $1.4 million a year.

For others, private insurance providers can offer better deals. Rebecca Byrom, owner of the San Diego-based California Flood Insurance agency, said that she received 30 phone calls Tuesday morning from California homeowners scrambling to acquire flood insurance.

"I had somebody call and tell me that they had 4 feet of water in their house and they wanted to get an insurance policy," Byrom said. "It's like being in an automobile accident and then calling your insurance company to get insurance. It just doesn't work like that; you have to have foresight."

By Tuesday afternoon, the mandatory evacuation order in the Oroville area had been lifted, but emergency workers were still racing to reduce the lake's water level before storms hit the area. Some Oroville residents, such as homeowner Catherine Farnham, believed flood insurance would be important for those who live downstream from the dam.

"I live above the lake, so my only concern was for family members visiting the area," Farnham said. "But for those living (downstream), they should probably have flood insurance."

If the Oroville dam were to fail, the damage could be financially catastrophic, according to data released by CoreLogic, an Irvine-based firm that tracks the housing industry. An analysis released by the firm on Wednesday noted that in the six primary counties at risk if the Oroville dam were to completely fail, about 50,000 homes would be affected and it would result in about $13.3 billion in reconstruction costs. The CoreLogic figures show more than 20,000 homes could be affected in Yuba City and more than 11,000 in Oroville itself. The company declined to elaborate on the data.

Some homeowners, such as those with federally backed home loans, are required to have flood insurance, according to Kelly Hudson, an external affairs officer with FEMA. Acquiring flood insurance can be particularly important for areas that are at risk of flooding, such as communities near dams, Hudson said.

"In high-risk areas, there's at least a one in four chance of flooding during a 30-year mortgage," Hudson said.

Regardless of the kind of insurance provider used, Byrom noted that due to contractual obligations, there was little risk that a company would raise insurance rates or drop customers in response to situations such as Oroville's flood threat. However, Byrom added that customers should be aware that insurance providers could decline to renew contracts after they have been fulfilled.

As for the Oroville situation, although a new flood insurance plan would unlikely cover any damage caused by a potential dam break this week, Lohmann nonetheless encouraged residents to consider purchasing flood insurance. She noted that it could be purchased at any time and could be valuable as 2017's rainy winter season continues.

"We're encouraging people to talk to their insurance agents because we have a long winter to go, and there may be more storms," Lohmann said. "We are in the middle of a rainy winter season. It's very probable that more storms are coming through April and that being the case, folks might want to talk to their local insurance agents."

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