CEDAR RAPIDS, Iowa - As rivers recede in this state and others, credit unions are finding something else left behind by the floods: questions over their insurance coverages.
Record flooding spilled out to credit unions that never suspected they needed flood insurance, a number of CUs told Credit Union Journal. And when they checked with their insurer, CUs often found they only had coverage for damage to certain equipment, and not the building.
Rick Benhart, CEO of the $467-million Collins Community CU here, says his CU will pick up the tab for damages to one.
“We don’t have flood insurance,” Benhart said. “The flood went well beyond the 100-year floodplain. It’s incredible.” Brad Mertens, CEO of the $20-million Metco CU here, said MCU doesn’t have flood insurance. “I’m not sure what the cost will be to fix my location. I’m a small shop. I hope it won’t dramatically affect any other things we want to do. I have a pretty extensive remodel project I was going to start next week. That will be put on hold.”
First Federal CEO Tim Byers is one of the fortunate. Byers recently bought flood insurance. “We only had flood insurance for the last five months,” said Byers, who switched from CUNA Mutual to Allied Insurance. “My new insurance carrier told me that I’m in a flood zone and that I need flood insurance. This was never mentioned to us before.” Madison, Wis.-based CUNA Mutual Group says flood coverage is always addressed with CUs.
“When we review a package of protection with a credit union, we specifically discuss flood insurance with them. However, we can’t force a credit union to purchase flood coverage,” said Rick Uhlmann of CUNA Mutual Group, who reminded that flood coverage is purchased through the Federal Emergency Management Agency (FEMA). “In addition to that discussion, periodically we provide our insured with literature describing flood coverage, the importance of it, and how to obtain it. We often find that many credit unions choose not to add flood insurance for expense or other reasons.”
With early Iowa flood damages set at $1.5 billion statewide and hundreds of millions of dollars in Cedar Rapids alone, FEMA spokesperson Butch Kinerney is concerned that many residents and businesses don’t have flood insurance.
“People in the Midwest tend not to buy flood insurance quite as readily as those in hurricane-prone states,” Kinerney said. “And in a tight economy, people don’t always think of flood insurance as a necessity and it might be one of the first things to go. In Iowa, unfortunately, we are not seeing as many people with insured losses.”
Kinerney said that even though last week’s floods were of epic proportion, it’s easy to determine risk. “That’s very clear,” he said. “FEMA issues flood insurance rate maps–90,000 of them. All you have to know is your address to determine your risk.”(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
