Figuring Insuraance Losses

I have written quite a bit about insurance since hurricane Katrina damaged my house and every other one in this area. But this concept of housing insurance is a nebulous one at best. That is, one never knows what settlement the insurance company will propose to the owner of the damaged property.
There seems to be no set standard that all insurance companies follow, yet most insurance contracts for housing are much the same. So the whim of the adjuster and the company often determines what settlement the property owner receives. But what about those who have no or the wrong kind of insurance?
Every home owner in the U.S. is offered two kinds of home insurance when purchasing his or her home. There is flood insurance, for damages caused by water to the structure that comes from "below" and Homeowner insurance, damage to the home caused by all other causes and water damage that comes from "above" (rain or other precipitation that comes through the home ceiling and damages the contents).
Any person who borrows money from a mortgage banker when buying his or her home must buy Homeowner Insurance, But flood insurance is not required. there is the rub. As many as 50% of the homeowners who had flooding of their homes from Katrina did not buy a flood insurance policy, and hence, have no coverage for their flood damage.
Surely, anyone living in this swampy land, filled with water and 6 feet below sea level, should have enough common sense to buy the flood insurance. It is cheap in comparison to Homeowner Insurance because the federal government subsidizes the cost of it. But many people try to "save money" by skipping on the flood coverage.
In St. Bernard Parish (adjacent to the city of New Orleans) every single come was covered with water and is now unlivable. They will all probably be bulldozed. yet, only 20% of those residents had their homes covered with flood insurance. So what is the government to do? Can it force insurance companies to cover their damages under their Homeowner policy provisions? Will the government pay the damages for those people.? Or will those homeowners be left in the cold, penniless and homeless, a terrible place to start when rebuilding their lives.
That's just one dilemma facing the Katrina crowd.