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Superstorm Sandy insurance costs could sink coastal home sales

The annual postcard from my township assessor arrived. At first glance it looked like good news. The appraisal of my New Jersey coast home was lower by almost $60,000, which indicated that this year's taxes should go down. Then I thought about it. There was a reason why the assessment was less. Assessments reflect housing values, and my house, like most others in the Long Beach Island area of Ocean County, had been flooded by Superstorm Sandy. Now we, as homeowners, will be faced with a myriad of new problems and all of them, in some way, seem to involve insurance. My conclusion: it is getting more and more difficult to either repair -- or sell -- our homes. Risky business The natural inclination of property insurance companies is to avoid risk. So when an area has too much risk, insurers back off, as they did in the Gulf Coast states after Hurricane Katrina hit in 2005. Just how much is too much? Sandy is the sixth costliest insurance event in our country's history, with up to $25 billion in losses just for private insurance companies, predicts Insurance Information Institute (III) President Bob Hartwig. And now two of the top… (continue reading......)

Did your insurance agent fail to mention flood exclusions?

Many homeowners don't understand their insurance Newspapers and television stations in New York and New Jersey are still covering the sad stories of those who thought that they were insured from the damage done by Superstorm Sandy -- until they learned that they weren't. One such story appeared in The Star-Ledger of Newark, N.J. about a retiring couple who insured their beachfront cottage and its contents for $225,000. The house was torn apart, but their insurer gave them only little more than $6,000. That's because the majority of Sandy's damage was caused by flooding, so if you didn't buy federally sponsored flood insurance, you weren't covered. Like hundreds and perhaps thousands of others, this couple is taking their case to court, according to the newspaper, but probably won't win. The insurance contract that they have with their private carrier is crystal clear: It doesn't cover flood damage. Hard line softens Insurance companies have long taken a hard line on this, refusing to pay for flood damage in previous hurricanes such as Katrina and Irene. "If you didn't read the contract and realize you weren't covered, that's your tough luck," is one insurance agent's argument. But in a recent rare moment of self-reflection at their recent annual… (continue reading......)

At the Jersey shore, with no flood insurance

going without flood insurance Some people would argue that owning a home anywhere on the coastline without flood insurance is reckless, like not having health insurance. I would tell you that it's a calculated risk. I have a small home on a lagoon across Barnegat Bay from Long Beach Island in New Jersey. By now almost everyone knows that this is where Hurricane Sandy came ashore, cutting the island in pieces. The devastation was so bad that after eight days homeowners on the island have just been allows to cross the only bridge connecting the island to the mainland in order to measure their losses. Sandy came ashore on a harvest moonlit night with two high tides. The first sent the Atlantic Ocean into the bay; the second pushed that water over our bulkheads and into our homes. Mine filled with 2 feet of water. It's amazing what that amount of water can do. My outdoor shed floated away, replaced by someone else's wreck. My refrigerator ended up leaning against the wall. The water that remained inside my home saturated my furniture and popped up my laminate flooring. Floored and uninsured So why didn't I have flood insurance before this happened? The answer: My… (continue reading......)

We'll all have to pay for Isaac

flooded neighborhood My neighbor thought he had finally sold his house after three unsuccessful tries. But just when the buyer was about to sign off, mortgage financing agency Fannie Mae tacked on one last charge to the bottom line: flood insurance. It killed the deal. My neighbor was angry. His home sits on high ground and has never been flooded. A creek several hundred yards away overflowed 40 years ago, but a cement culvert corrected the problem and our homes have stayed dry ever since. High and dry Why was the buyer forced to purchase flood insurance through the costly National Flood Insurance Program (NFIP)? A lot of people are now asking that question. From high-rise residents in New York City to desert-dwellers in Los Angeles, some potential buyers are being hit with a flood insurance requirement. And, they don't have a choice. But even if your mortgage lender doesn't require flood insurance, the Federal Emergency Management Administration (FEMA), which failed so miserably during Hurricane Katrina and runs the NFIP, still gets into your business. At my home near the New Jersey shore, the township denied me the right to update and build with my own money unless my house was raised… (continue reading......)

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