Floodplains Outside Your Front Door

Unfortunately, for many homeowners, the answer they receive from their agent or broker will be “No, you don’t have flood insurance. You’re three and one-half miles from the nearest coastline. And if you recall we discussed adding flood insurance coverage to your insurance portfolio and you refused to spend money on a flood insurance policy when you lived in what you considered a very safe flood zone.”

Floodplains in Bedford-Stuyvesant? Bushwick? Brownsville? Park Slope? Fort Greene / Clinton Hill? Carroll Gardens? Getouttahere!

Floodplains are everywhere?

Who knew?

Picture this. It’s another beautiful day in the wonderful city of Brooklyn, New York. The birds are singing, the flowers are blooming, and that annoying depression in the middle of the street halfway down the block (which happens to be right in front of your house), suddenly erupts into the most glorious of geysers. Hundreds of thousands of gallons of water burst into the air,  land on the street and your sidewalk, and begins to pour into the first floor, garden level, and basement of your beautiful home.

Well, your formerly beautiful home. I mean, you can still use the upper floors.

You hope.

Strange how you never noticed your block is one of three forming a shallow valley. No matter which point you turn to on the compass, you realize adjoining streets and avenues all slope down to where you stand. In fact, it reminds you of the pictures you’ve seen of floodplains around the country. So that geyser spewing tens of thousands of gallons of water each minute from a broken underground water main, is filling up yours and the surrounding blocks as though they were one huge swimming pool.

And the water is getting deeper by the minute.

You suddenly realize what floodplains are, and your existence in one.

Thank Goodness For City Services

One real positive about living in New York City is how quickly the Department of Environmental Protection, (DEP), reaches your block and shuts off the main which gave life to the geyser, just an hour or two. Once they shut the water off, they set about pumping out the water which collected underground. After that they’ll invite each local utility with underground pipes, tubes and wires in the general vicinity of the water main break to come and check their equipment, making any necessary repairs.

Once this and other work, including repairs to the water main, are completed, the giant crater in the street is repaired, the water service restored, and all will be well with the world again.

Well, almost. You see, several major problems remain.

Property Owner, We Have A Problem

As the water poured into your home, you quickly called your homeowners insurance company to report the claim, only to learn your loss isn’t covered by your homeowners insurance policy.

Flood, as your insurance company’s customer service representative explained, is not covered by the typical homeowners insurance policy. This is clearly discussed in the Exclusions section of each homeowners insurance policy which reads,

“WATER DAMAGE, MEANING:

a.    Flood, surface water, waves, wave wash, tidal water, overflow of a body of water, or spray from any of these, whether or not a result of precipitation; or driven by wind … “

So, even though your property located miles from the coast, and you are not in a high-risk flood zone, you suffered a loss caused by a flood.

Your basement is a disaster. You need to rip out and replace floors, ceilings and walls, and replace your hot water heater and boiler and the freezer. Where will you find the money going to come from for all of these unexpected expenses?

The customer service representative asks you a frightening question. “You don’t have a flood insurance policy with our company. Do you have a flood insurance policy with any other company?”

Will You Get Good News or Bad News?

Now comes the moment of truth. You call your insurance agent to see if you have a flood insurance policy.

Unfortunately, for many homeowners, the answer they receive from their agent or broker will be “No, you don’t have flood insurance. You’re three and one-half miles from the nearest coastline. And if you recall we discussed adding flood insurance coverage to your insurance portfolio and you refused to spend money on a flood insurance policy when you lived in what you considered a very safe flood zone.”

If you think this is wrong, look at the situation in Baton Rouge, where they recently suffered heavy rainstorms which lead to wide-spread flooding. In Baton Rouge and its surrounds, some 82% of the houses suffering flood damage lacked flood insurance.

To make matters worse, some 7,000 plus businesses in the affected area suffered severe flood damage, causing them to at least temporarily, close their doors.

Over 73,000 employees are now unemployed until the affected businesses can secure bank and federal loans to reopen. If they ever reopen.

And some 80% percent of the affected homes and businesses are located in “X” flood zones, the zone where you should only have to worry about floods every 500 years.

Climate Change, Anyone?

This and other past and future flooding events prove there is a new model of what is a “safe” flood zone. Here’s a hint: There are none.

New construction which places concrete and macadam on what was permeable ground, changes the very nature of a community, increasing the flood risk.

Aging infrastructure in the shape of bad roads places more stress on underground water pipes, which themselves are in serious need of replacement, causing more and larger water main breaks.

For properties closer the shore, rising sea levels, and a warmer Atlantic Ocean create hurricanes packing increasingly greater destructive power, resulting in more damage to sandy beaches and dunes, and the homes they were designed to protect.

And the hurricane season, which is ‘supposed’ to only run from the first of June until the first of November, seems to start earlier, and end later, each year.

So please take this simple bit of advice: “Hurricane Season” is no longer just a season, it is a year-round event.

Flood zones are just lines on a piece of paper, and water is no respecter of lines on a piece of paper.

We are all at risk from the danger of flooding, and the rebuilding costs which follow.

Stay dry.

Eustace L. Greaves, Jr., LUTCF is an independent insurance agent and broker based in Brooklyn, NY. Call him today at 718-783-2722 to make an appointment for your personal insurance review of your home, auto, flood, renters, coop, condo, life and disability insurance policies.

You can also reach Eustace with an email to Eustace@insuremeeg.com.

New Changes to Coastal Homeowners Insurance

Now the insurance situation, is more dire not just for new homebuyers but for existing homeowners too. In between bites, I reminded Anne-Marie about how Hurricane Irene in 2011, and the big momma, Hurricane Sandy in 2012, gave insurance companies greater insight into number of homeowners risks they insured in certain areas. And it is these new insights which have given rise to newer realities in homeowners insurance.

It’s amazing. Whenever I read or make a presentation about the new changes happening in coastal  homeowners insurance here in New York State’s Downstate Region, (Brooklyn and the four boroughs, Nassau, Suffolk, Westchester counties), I usually run into one of Brooklyn’s leading real estate brokers the very next day. And they wrangle a free lunch out of me.

Talking Coastal Homeowners Insurance with Anne-Marie Stanislaus of Reserved Realty LLC

Late last month, I had the pleasure of enjoying another terrific pizza with Anne-Marie Stanislaus, one of New York City’s leading independent Real Estate Brokers, and the Owner and Principal of Reserved Realty LLC.  We met at the number-one Italian restaurant in Prospect Heights, the world-famous Cataldo’s Italian Restaurant and Pizzeria, at 554 Vanderbilt Avenue, between Dean and Bergen Streets. The first question she asked was “Eustace, I know we talked about this last year, but what’s going on with the coastal homeowners insurance business in Brooklyn? Companies are not just refusing to write certain types of houses. I’m getting calls from clients complaining their insurance companies, after decades without claims or late payments, are cancelling policies in certain areas like they had the plague! And not just in Brooklyn, mind you, but throughout the Downstate region.”

We’d had a similar discussion back in November of 2012, right after Hurricane Sandy, which I detailed in an earlier post, “Coastal Homeowners Insurance, Part 2.9.” Back then, when life seemed simpler,  we were more concerned about changed real estate practices as it pertained to new sales.

The Latest Twist In Coastal Homeowners Insurance

The insurance situation is becoming more difficult not just for new home buyers but for existing homeowners too. In between bites, I reminded Anne-Marie about how Hurricane Irene in 2011, and the big momma, Hurricane Sandy in 2012, gave insurance companies a major case of the willies and greater insight into the number of coastal homeowners insurance risks they insured in certain now-hazardous areas. It is these new insights which created newer realities in coastal homeowners insurance.

Take It Back A Mile

First, when certain companies decided they no longer wanted to insure risks within one (1) mile of a tidal coastline, they just sent the affected policyowners a letter which basically said, “Thank you for being our homeowners client for the past  15, 20, or even 30 years. We also appreciate your not presenting us with any claims during your years with our company. We changed our underwriting guidelines, and since you no longer fit or match them, you’re no longer one of our homeowners insurance clients effective (You fill in the date.).

“Thank you, and don’t worry, you can still keep your auto, life, and whatever else you have with us. We just don’t want the house anymore.”

Now, just for the record, while most insurance companies pulled their coastal boundary line to a distance of at least one mile from the tidal coastline for dwellings, there are those companies who will continue to honor their commitment to their clients, so long as they don’t lapse their policies, submit some really dubious claims, or decide they can make some side money by turning their legal two-family home into an illegal three, four, or even more family house.

Many companies, however, are simply dropping their clients, and, just like that, the homeowner must seek and secure new coverage for their home.

There’s a new twist in this tale of woe, however: Now some insurance companies are cancelling policies if they are within one mile of any body of water.

For example, I’ve recently written a new policy for a homeowner who lives more than one and one-half miles from the tidal coastline, but within one-half mile of the tip of Brooklyn’s Paerdegat Basin.

A property on the western side of Flatlands Avenue. One which suffered absolutely no wind or flood damage during Hurricane Sandy.

He recently received a cancellation letter letting him because of changes to what the company felt was a coastal risk, his policy was being non-renewed. A policy he’d had for 28 years. Claim-free.

And now, I’m going to write his neighbor a policy, since the same company just sent him his non-renewal letter.

So Anne-Marie looked at me like I had two heads. “So wait a minute,” she asked. “Now we’ve got to know how far a property is from any body of water before we try to market it? When will this madness end?”

“Who knows? Probably when enough disaster-free and thus heavy-claim time passes. ”

She looked at me and said, “Well, that’s not so bad then.”

“Sure”, I said, “Even though when FEMA finishes remapping this region, probably either in late 2014 or by mid-2015,  mandatory Flood Insurance policies with premiums in excess of $2,000 and $3,000 will create new problems for homeowners now remapped into AE and VE zones…”

“Enough!” she yelled. “For that Greaves, I want more pizza! And no more insurance talk!”

And the second pie was even tastier than the first.

You can reach the beleaguered  Anne-Marie Stanislaus at 917-887-7468. She and her team at Reserved Realty will do a fantastic job of  either helping you find your dream home, or marketing your current home and apartment rentals. You can always reach Eustace Greaves Jr., LUTCF  by telephone at 718-783-2722, or send him an email to Eustace@insuremeeg.com.