When is a flood not a flood? That’s a serious question for the Garden State's residential communities. Even if they have flood insurance, damage caused by heavy rains and backed-up sewers may not meet the National Flood Insurance Program (NFIP) definition of a flood—and that can mean financial devastation for condo, HOA and co-op owners, who thought they were fully covered.
“Flood insurance covers direct physical losses by flood and losses resulting from flood-related erosion caused by heavy or prolonged rain, coastal storm surge, snow melt, blocked storm drainage systems, levee dam failure, or other similar causes,” says Loretta Worters, vice president of communications at the Insurance Information Institute (I.I.I.), a non-profit trade association sponsored by the property-casualty insurance industry. “To be considered a flood, waters must cover at least two acres or affect two properties.”
According to Charles “Cappy” Stults, president of Allen & Stults Co. Inc., an insurance brokerage based in Hightstown, the filing of a flood insurance claim is not much different than filing any other property claim. The information required is essentially the same. “If with a private insurer versus the National Flood Insurance Program (or NFIP), the coverage is simply an added ‘peril,’ he says. “Flood being added to perils of fire, wind, explosion and the like. Keeping track of expenses to protect the property from further damage, the cost of mitigation to reduce the size of the loss and estimates to repair or replace the damaged property are all needed for the claim adjustment.”
“Once an insurance claim is reported, an adjuster is assigned. He or she will go to the site and review the damage and determine what the cause was and whether it was caused by a covered cause of loss under the policy, what was damaged and the estimated cost of repairs,” says Edward J. Mackoul, CIC, president of Mackoul & Associates Inc., an insurance brokerage in Old Bridge. “It is always a good idea for the insured to take pictures so they have a record of what was damaged. In the case of Sandy, a lot of associations had to show proof that there was damage—say an air conditioner unit showing a water line on it—so it’s good to have something to fall back on in the case of a discrepancy.”
In 2012, Hurricane Sandy hit the East Coast, and its effects in New Jersey were devastating, with economic losses to businesses estimated to be as much as $30 billion. The massive storm made landfall on October 29th, leaving over 2 million households in the region without power, 346,000 homes damaged or destroyed, and 37 people dead.