Cedar Rapids Businessman Learns A Valuable Lesson About Having Flood Insurance

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Release date: 
January 14, 2010
Release Number: 
1763-09-256

Des Moines, Iowa -- Frank Stephen was going to take life a little more easily in 2009. He was going to retire after owning and operating Dostal Catering Service in Cedar Rapids for the last 20 years.

But two things threw a monkey wrench into Stephen’s retirement hopes. The biggest wrench was called the Iowa Floods of 2008. The Cedar River, blocks from the Dostal Catering Service building, crested at record levels, swamping his business.

The second thing was that Stephen didn’t have any flood insurance.

“The business was supposed to have been sold January 2, 2009,” said Stephen. “We could not go through with the sale because there wasn’t anything to sell. We didn’t know what we were going to do because we had to start all over from scratch – less than scratch really because nothing much was saved.”

Things could have been disastrous for Stephen and his business. Fortunately, however, he had the support of the community, members of his church and other volunteers.

“We had about 45 members of our church mucking out the building – including our 75 year-old pastor,” said Stephen. “The churches also let us use their kitchen because we had a wedding to cater the same week we were flooded out.”

The local electrical union gave Stephen a space to work in their building, and members there donated their time and material to get them set up for business. The plumbing union did the same, as did the bricklayers’ union. Food brokers donated food to help Stephen get back on his feet.

The reason those organizations were so quick to help Stephen rebuild was because of his involvement in the community. Stephen had donated dinners and food as part of fundraisers for various community functions throughout his 20 years of catering.

“I don’t know if I could have recovered had it not been for their wonderful help,” said Stephen. “I was looking at $400-500,000 in rebuilding expenses at least. I didn’t have that kind of money.”

Flood insurance, however, would have paid for most of Stephen’s recovery effort, a fact that he now realizes.

“It was an eye-opening experience,” said Stephen. “If I would have had flood insurance, I would have been looking at maybe $125,000 out of pocket expense. Instead, I was looking at between $400-500,000 to get my business back going. To be honest, I didn’t think I could afford to do that. I thought I was going to be wiped out, and I would have been had it not been for the support of my family, friends, church and community.”

When asked why he hadn’t purchased flood insurance, Stephen said he didn’t have a real good answer. “To be honest, the thought of getting flood insurance never occurred to me,” he said.

Because Stephen didn’t have a mortgage, there was no requirement by his lending institution to purchase flood insurance – even though his business building was in a special flood hazard area. The Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 prohibit Federal agency lenders from making, guaranteeing or purchasing a loan secured by improved real estate or mobile home in a special flood hazard area unless flood insurance has been purchased and maintained during the term of the loan. 

Stephen has gotten Dostal Catering back into pre-flooding operation. He also plans on going through with his retirement in 2010 instead of 2009.

And the business is back at its original location – with flood-proofing improvements made to the building.

In order to receive an insurance rating based on the 100-year flood protection, a non-residential building must be flood-proofed to meet the National Flood Insurance Program requirements, and the flood-proofing must be certified...

Last Updated: 
July 16, 2012 - 18:46
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