Homeowners insurance blog

How have things changed since Sandy?

One year ago today, Superstorm Sandy ripped through the Northeast, slamming New York and New Jersey particularly hard. The damage total is hard to pin down. Insured losses – mostly through home insurance claims – totaled $18.8 billion. That doesn’t count flood claims, because flooding isn’t covered by standard home insurance policies. As of early September, about $7.1 billion in Sandy-related claims had been filed through the federal flood insurance program.

The sad fact is that many of the people hit hardest by the storm didn’t have flood insurance. That means wind, hail and other types of damage to their homes was covered, but losses due to flooding weren’t.

So what have we learned since then?

The answer is debatable. Have homeowners learned that they need flood insurance, even if they’re not in a traditional flood zone? Take a look at the stats:

  • As of August of this year, 5,541,100 flood insurance policies were in force in the U.S., according to the Federal Emergency Management Agency, which administers the flood-insurance program.
  • One year ago, 5,532,359 policies were in force.

That’s only 8,741 additional policies sold since Superstorm Sandy.

Reasons people aren’t buying

One reason people may not be buying flood insurance is because of the ongoing debate over the price of the program. The flood insurance program is designed to be self-sustaining, but many policies have been subsidized over the years. The 2012 Biggert-Waters Flood Insurance Reform Act is designed to make premiums reflect the true cost of covering properties.

That means many premiums have increased or are increasing by 25% and will continue to go up annually until they reach the true cost.

However, consider the following. Federal disaster assistance is no replacement for adequate flood insurance. It usually is a loan that must be repaid with interest. According to floodsmart.gov, the official site of the National Flood Insurance Program, a $50,000 loan at 4% interest would result in monthly payments of about $240 a month – for 30 years.

You ought to know

  • 20% of all flood insurance claims come from people who live in areas that are not deemed to be high risk.
  • It takes 30 days for a flood policy to take effect
  • Many homeowners policies for coastal states include hurricane deductibles. That means the deductible for hurricane-related claims is a percentage of the home’s value – not a fixed amount. (Homeowners in the Northeast got a break here – because Sandy wasn’t technically a hurricane when it made landfall, hurricane deductibles were not in force.

What can you do

If you have not purchased flood insurance, reconsider that decision and understand the risk you’re taking without it. Some homeowners in the Northeast affected by Superstorm Sandy have walked away from homes because of the flood damage and the potential for mold and other problems.

Monitor storm news during hurricane season: roughly from June 1 to Nov. 30. Not all flooding comes from hurricanes; homeowners in Colorado, where less than 1% of homeowners have flood coverage, recently suffered devastating losses because of heavy rains.

Once you learn a severe storm could be on the way, you can take steps to protect your home. Trim overhanging tree branches that could crash on the roof. Bring loose items, such as lawn chairs, inside. Cover your windows with plywood if you don’t have storm shutters.

Make sure you have plenty of gasoline and food that doesn’t need heating. Be sure to have a supply of water on hand as well.

Discuss evacuating with your family – line up with friends or family members a place to stay that’s out of harm’s way.

Grab your home inventory – a listing of your home’s contents. It will help you with the claims process. If you haven’t done one, download one here and get to work. It will make the claims process much easier.

So, to answer the original question. Is much of the East Coast still vulnerable to a Sandy-type storm? Regrettably, yes. But you can take steps to make sure you’re as protected as possible. Don’t let the images of last year’s events slip from your mind.