Storm Surge Damage May Not Be Covered by Some Insurance
As storm-battered homeowners, business owners and government officials survey Sandy’s damage, the question for many is what the repair price tag will be. The storm’s assault may cause as much as $20 billion in losses, but less than half of that is likely insured. Some will be covered by the government, like infrastructure repairs. But some losses simply won’t be covered, leaving businesses and homeowners holding the bag.
Regular homeowners and renters policies don’t cover flood losses. For residences, people must buy extra flood insurance coverage, which is typically sold by agents as part of the government’s National Flood Insurance Program. As many will recall, there was a big debate during Hurricane Katrina over whether damage was caused by flooding or wind. If it was wind, destruction was covered by standard policies. Bob Hartwig, president of the trade group Insurance Information Institute, says, “that issue has been settled. There is no question that a storm surge is a form of flooding.”
That means that homeowners impacted by Sandy’s surges who don’t have flood insurance are out of luck. Hartwig says in low lying areas—like parts of Brooklyn and Queens—“the penetration rates for flood coverage are very high.” But not everyone has this coverage…