Two years ago, on October 29, 2012 Super Storm Sandy came ashore just south of New York City causing significant flood damage to many buildings in the Financial District and in Battery Park City, New York.  Our firm was on the ground within 3 days post-storm, helping people prepare to file their Sandy insurance claims. We ended up opening an office in the area and stayed a good 6 months. Many of these high-end residential condominium buildings overlook the New York Harbor, Statue of Liberty, and skylines. Tutwiler & Associates Public Adjusters were retained to represent one of these tower communities.

Here is an insurance claim question that we recently answered as a contributing member of insurance claim experts for United Policyholders who advocates for property owners. 

Q. I have been offered a job in Wilmington, NC and would like to live in a nearby beach community such as Surf City, NC.  Other than USAA, What is the best insurance carrier for flood insurance? 

A. Before I answer your question, please allow me to give you some background on flood insurance as our public adjusting firm has seen significant changes over the years. Because of the high risk of flooding and the widespread damages that often result, the insurance actuarial folks could not manage or price this peril so as to set an affordable premium. Thus the private insurance industry was simply not agreeable to assuming the flood risk. Thus, flood losses were excluded in most all standard property insurance policies. In 1968, the National Flood Insurance Program (NFIP) was created by an act of Congress as the lack of this coverage was affecting the economy and commerce. In the beginning years, this program while providing flood coverage, was very poorly run and claim service was terrible. Probably not surprising given that the NFIP was headquartered in Washington, D. C. as it quickly became a typical Washington bureaucracy, unresponsive and extremely difficult to work with.

When there is a storm event such as the flooding in the Pensacola, Destin, Gulf Breeze and the Ft. Walton Beach areas we always get questions about how depreciation works. As public adjusters, we deal with this type of situation all the time when we are managing a policyholder’s claim. Deprecation is figured in a number of ways depending on who is making the calculations. As an example; in the insurance adjusting field, the text book example is to come up with a percentage based on the age of an item and its full life expectancy. So if an item is one year old and the average life is 20 years the percent to be applied for deprecation is 5%.  If the cost of the item new is $5,000 then $250.00 in deprecation should be taken for each year of life. If an item is 5 years old and the life expectancy is 15 years then 33% would be reasonable.

Property owners in the Pensacola, Destin, Gulf Breeze and the Ft. Walton Beach areas may be surprised to find that their flood claim for foundation damage is denied because the NFIP says the damage is caused by earth movement; even though the earth movement was caused by flood waters! Before I discuss this, let me remind any reader that each loss is fact specific to that property. You may have two homes or commercial buildings side-by-side in close proximity to each other and the loss conditions from the same insured event may vary.

For those who have National Flood Insurance, we encourage you to review and pay close attention to your flood policy’s terms and conditions. The policies issued by the National Flood Insurance Program (NFIP) are unique because they fall under a Federal Government program with its own rules and regulations. As an example, the NFIP policy requires you to file a proof-of-loss within 60 days of the flood event. In layman terms, you must have figured out your loss and arrived at a sum certain amount to put on a document called a “proof of loss” and have it submitted to the appropriate person handling your claim. Unless this time period (60 Days) is waived by an authorized official of FEMA/NFIP the claim may be denied in total for failure to comply with the policy terms and conditions.

Since October of 2013 our office has been cranking out claim packages for all of our clients so they fully comply with the terms and conditions of their flood policies.  One of those tasks is the filing of the Proof of Loss, which to the layman can be as complex as building a house with no construction experience.  

For a third time, FEMA has extended the deadline for filing Superstorm Sandy NFIP flood policy claims, 6 months to October 29, 2014. This is allowing policyholders who have supplemental claims or who have had repairs delayed due to code issues or other situations to gather the proper documentation.

The House finally came to its senses last week and amended the 2012 Biggert-Waters act by scaling back flood insurance rate increases. This is not only good news for longtime homeowners in coastal areas but also will help revive the real estate market which made some homes too expensive due to substantial flood rate increases. Amongst the positive changes are that new homeowners will not have to immediately pay full rates and those long time residents holding existing policies will see more gradual increases.