Saturday, July 15, 2006

First 'Wind vs. Flood' Insurance Lawsuits from Katrina

Well, we knew it was coming, but the first lawsuit against insurance companies resulting from the denial of Katrina claims has started. Unfortunately, most people did not have flood insurance, either because they felt they were protected by the levee system (those people may have a legitimate beef with the Army Corps of Engineers or others, in thinking the levees should have worked) or they thought they were far enough from the water to be safe.

In the recent flooding in some upstate New York counties, it has been estimated that only one per cent of the people had flood insurance. If you live in a mountainous area, it's hard to imagine needing flood insurance, but FEMA estimates that 25% of all flood claims come from areas that are NOT considered 'special flood hazard areas.'

Here on Long Island, and especially in Suffolk County (the further east you go, the more Long Island is considered vulnerable to hurricanes and other such big storms) we have a slightly different situation for those right down by the water. Since most homes have been built or in some way refinanced over the past 35 years (since the National Flood Insurance Program started), most have been required by their banks to carry both wind (homeowners insurance) and flood insurance. Many people should probably review their limits to be sure they are enough, but there is a lot of flood insurance in force near the South Shore.

Move a few blocks north of the water, however, and the situation is quite different. That's where the flood zones change to something other than 'A', and the banks have, until now, not been mandated to require flood insurance. That is all about to change as congress works on the 2006 Flood Insurance Act which will change the whole system to require more participation based on what happened with Katrina.

A few weeks ago Newsday published a map that clearly shows what our Emergency Preparedness people have been telling us for a long time. Based on elevation (facts, not guesses), water from a hurricane the size of Katrina would bring flooding past Sunrise Highway in many places, and certainly much further from the shore than has been seen in the memories of most of us.

Still, flood insurance in those Long Island areas outside the hazard zones can be as little as $352 (even less for a house on a slab), so many people are buying it anyway, since it seems a small price for a lot of peace of mind.

As always, for more info on flood insurance, visit our site at