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Getting Flood Insurance

Though costs will likely go up in the wake of the recent hurricanes, flood insurance is still a life preserver worth considering.

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This story appears in the December 2005 issue of Entrepreneur. Subscribe »

In light of the destruction caused by Hurricanes Katrina and Rita, even homeowners who don't live in flood-prone areas might want to consider purchasing flood insurance. The disasters--and the wave of lawsuits that followed--spotlight the limits of standard homeowners policies. You're typically on your own when it comes to damage from rising water, whether a storm surge or a clogged drain caused it.

But right as millions of us decide the federal government's flood insurance program might be worth having, premiums are about to jump. The National Flood Insurance Program owes significantly more in hurricane damages than it has in its reserves. That means borrowing from Congress or getting a special appropriation, as well as raising premiums. The question is just how much more it will cost, and whether it's worth it given your individual circumstances.

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