With all the devastation caused by Hurricane Katrina and possibly more from Rita in two days, its probably a good idea to consider flood insurance if your property is vulnerable. Yet only about one-quarter of the homes in areas most vulnerable are insured against flood loss [Insure.com] , according to the Federal Insurance Administration (FIA). In those areas, flooding is 26 times more likely to occur than a fire during the course of a typical 30-year mortgage.
John Stossel of ABC News provided commentary on his experience with his waterfront beach house that was washed away in a winter storm [ABC News].  He contends that the federal government should not be in the insurance business. The low premiums (hundreds instead of thousands) actually encourages development in low lying areas. There is a cap on the amount covered but not the number of times the property owner can be reimbursed.
The average annual cost is $450 per month and many homeowners don’t realize flood damage is not covered in standard household insurance policies. Now insurance companies are offering high end houses full coverage or supplemental coverage [REJ]  in addition to the federal program.