Buy flood insurance before the water rises
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The new legislation would expand the current mandatory purchase rules to include all flood-zone loans, rather than just those with federal backing. And it also would mandate coverage for those living in levee-protected areas.

"People will be required to purchase flood insurance who never previously thought about needing it. It will bring more people into the program, spread the risk and keep costs low for those who can't afford coverage," says Charles E. Symington Jr., senior vice president for government affairs and federal relations for the Independent Insurance Agents & Brokers of America.

If you live in a 100-year flood plain and have a federally backed mortgage, you still may not now have flood insurance. That's because for many people flood insurance seems like an unnecessary expense -- if you've never lived through a flood and your neighborhood is dry as a bone, it's hard to believe it will happen.

And many mortgage companies haven't been vigilant in enforcing the rules, allowing customers to slide. "Even though people bought policies on the front end, they don't maintain them," Symington says. "As mortgages are resold in the secondary market, the policies lapse."

But under the new law, a mortgage company would be fined for being sloppy -- probably $1,000 per customer. So after this year, if you are in a flood zone, regardless of whether you have a federally backed mortgage or a mortgage from a private company, you'll be forced to actually buy flood insurance, or the mortgage company will be calling your loan, assuming the bill passes.

Buying flood insurance
While the National Flood Insurance Program underwrites flood insurance, it's mostly sold and administered by insurers that also sell other kinds of homeowners insurance. Before you talk to an insurance agent, you might want to determine your flood risk. If you are required or eligible to buy a policy (95 percent of the 19,000 communities identified as having some flood risk participate in the program), figure out what it will cost you by going to floodsmart.gov.

The insurance company you choose will be the final arbiter of what you pay. Theoretically, all flood policies cost the same, but Steve Kanstoroom, who runs a Web site that helps flood victims get the most from their flood insurance policy, says different companies interpret the rules differently, and a buyer often can save a little by shopping around.

There isn't exactly a smorgasbord of flood insurance choices. You choose between basic, which covers structure only, or buying insurance on a home's contents, as well. In certain high-risk areas, coverage on contents isn't available for basements -- unless it is a walkout basement, in which case, by federal definition, it isn't really a basement.

Structure coverage includes furnaces, hot water heaters, an electric panel, permanently installed flooring and some other things that you might have thought would be contents, such as certain appliances. It doesn't include furnishings -- those are definitely contents.