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With buildings torn apart and buses underwater, school districts trying to recover from Hurricane Katrina will have to start by figuring out where they鈥檒l get the money.
It was unclear last week just what sort of insurance coverage districts in the hardest-hit regions of Louisiana and Mississippi actually had. Equally uncertain was whether their costs would be absorbed by insurance companies, the federal government, or state and local taxpayers.
One concern, insurance experts said, was that the damage from flooding to schools in New Orleans may be covered by insurance only minimally, or not at all.
鈥淧eople think insurance is so boring, until you have a disaster,鈥� said Bob Jester, the president of Jester Insurance Services Inc. in Des Moines, Iowa, which provides coverage for all of that state鈥檚 school districts. 鈥淏ut the time to think about insurance is before. Hopefully, they did that.鈥�
While some districts are insured through private carriers, others are part of a pool of districts that self-insure. Such districts pay premiums, and when there鈥檚 a claim, the cost is spread among the members of the consortium, said Robert P. Hartwig, the chief economist at the New York City-based Insurance Information Institute.
Many consortiums carry reinsurance from private insurers to cover costlier claims, but some may not, Mr. Jester said.
Typical insurance may often cover hurricane damage from wind and rain, but not from flooding, which has wreaked particular havoc in the New Orleans area. Many districts don鈥檛 have flood insurance or buy it through the U.S. Federal Emergency Management Agency鈥檚 flood-insurance program, Mr. Hartwig said. But that coverage pays out only $500,000 for a structure, Mr. Hartwig said鈥攁nd a typical high school can be worth millions.
Flooding of school buses is usually covered by insurance, however, Mr. Jester said.
鈥榃e Can鈥檛 Get Down There鈥�
In Mississippi, most schools are insured by private companies, said Michael W. Waldrop, the executive director of the Mississippi School Boards Association, located in Clinton, Miss. Mr. Waldrop said he planned to meet Sept. 2 with insurance-company officials to discuss how districts should proceed.
Jimmy Chandler, an agent with Botrell Insurance Agency in Jackson, Miss., said that coastal counties hardest hit were insured through a consortium, but that his company insures several districts that sustained serious damage.
鈥淲e don鈥檛 really know how bad it is,鈥� he said. 鈥淲e can鈥檛 get down there.鈥�
In Louisiana, districts use both private insurers and insurance pools, said Ron Hayes, the risk manager for the 32,000-student Calcasieu Parish school system in Lake Charles, La., which is enrolling evacuated students.
In low-lying areas like New Orleans, it鈥檚 nearly impossible to buy commercial flood insurance, Mr. Hayes said, though the districts there may have had flood insurance through FEMA.
