Flood Insurance A Must For Coastal East Enders

Some homeowners without flood insurance were recently met with a surprise when they received their federal grants to cover the damage wreaked by Hurricane Sandy: an automatic $600 deduction.

The deduction pays for three years of enrollment in the National Flood Insurance Program—a branch of the Federal Emergency Management Agency (FEMA) that is the primary provider of residential flood insurance nationwide.

But once the three years are up, if homeowners don’t buy a standard policy—which provides $31,900 maximum coverage per claim—they won’t receive any disaster aid the next time there is a flood.

“The $600 deduction is for three years of premiums for enrollment in the Federal Flood Insurance Program for homeowners who received FEMA grants for Sandy damage and live in federally designated flood zones but did not carry flood insurance,” explained Oliver Longwell, U.S. Representative Tim Bishop’s communications director. “Clearly there is a risk for flooding in our communities and Tim does think it is appropriate for homeowners in designated flood zones to carry flood insurance.”

Flood insurance is mandatory for homeowners with federally backed mortgages if they live in an area subject to flooding at least once every 100 years. Only 13 percent of American homeowners hold a flood insurance policy, according to a poll by the Insurance Information Institute in 2012, a number that is unchanged from the 14 percent of homeowners in 2011, but well below the 17 percent who said they purchased policies in May 2008.

As of October 30, 2012, 4,797 structures—both residential and commercial—carried flood insurance policies in Southampton Town, according to FEMA officials. In East Hampton Town, there were 2,930 such policies.

In Suffolk County, 27,962 applicants have registered for FEMA assistance and more than $62 million has been paid out, according to officials. It is unclear how many applicants were uninsured and filing for flood damage; a breakdown by town was unavailable.

Just like the Eastern Seaboard, the National Flood Insurance Program has been slammed by October’s “superstorm” Sandy. As of January 10, approximately 56,000 claims had been filed in New York, paying out a total $1.1 billion, according to FEMA officials. In New Jersey, approximately 72,000 claims have been filed, totaling $940 million. It is unclear how many applicants were uninsured.

But that likely won’t be the end of the claims filed. The deadline to register for disaster assistance is Monday, January 28. Uninsured homeowners couldn’t have purchased a policy to cover flood damage post-Sandy. There is a 30-day waiting period before the insurance goes into effect.

However, program critics argue that the pending costs for Sandy would have been higher if more East Coasters had insurance, and even if there would be more premium dollars, it wouldn’t have been enough to pay out the claims. But FEMA officials disagree.

“The basic tenet of any insurance is the more people you have in it, the more stable the program is overall,” FEMA Press Secretary Dan Watson explained during a telephone interview last week. “Speaking generally, if you have more policy holders, the risk is spread and it’s more stable.”

On January 15, the U.S. House of Representatives approved a $50 billion Hurricane Sandy relief bill that will aid victims of the superstorm.

The vote followed cutting criticism from northeastern congressional Republicans and Democrats after the House leadership failed to bring forward a $60.4 billion U.S. Senate-approved aid package to the floor earlier this month. Instead, the House approved a smaller amount of the Senate bill—$9.7 billion. Democratic New York State Governor Andrew Cuomo and Republican New Jersey Governor Chris Christie classified the package as “a down payment” and called the inaction “inexcusable” in a joint statement.

The $50 billion emergency funding bill must now be approved by the Senate, which could vote on it as early as this week.

Approved in a two-part process, the aid package would fully fund FEMA and Small Business Administration programs in response to the disaster, as well as coastal protection and hazard mitigation work by the Army Corps of Engineers—about $11.5 billion, $780 million and $5.35 billion would be applied to each, respectively.

“I am proud to be a part of the bipartisan coalition that delivered this necessary aid to our hard-hit area, although we should have reached this point many weeks ago,” Democratic U.S. Representative Tim Bishop said in a statement issued on January 16. “I urge the Senate to pass this legislation without delay.”