Insurers See Storm Clouds Over Brooklyn

we are not in the flood zone and we got cancelled, and we are having a hell of a time finding coverage now.

Posted by: guest at September 12, 2007 10:20 AM

I've heard that people who are gettting their policies cancelled by companies like AllState are finding that State Farm Insurance will cover them.

Posted by: guest at September 12, 2007 10:28 AM

another example of the atlantic yards effect...

Posted by: guest at September 12, 2007 10:39 AM

Flood-related issues should not matter, as that requires a separate policy with the US Flood Insurance program. It could be a denial based on anything: terrorism; high-costs; desire on the part of insurance companies to diversify their geographic risk.

Posted by: guest at September 12, 2007 10:48 AM

I was dropped by All State. I'm in Park Slope near 7th ave and quite far away from any water. I also had a really hard time getting insurance from almost ANY provider due to what I consider to be pretty silly hurricane worries.

All State is not accepting new policies for ANYWHERE in the 5 boroughs... think about how much business they are turning away. Supposedly there was a big hurricane 70 years ago and there's supposed to be a 70-some-odd year cycle.

Posted by: guest at September 12, 2007 11:05 AM

Is it flooding or wind damage that is the reason why the insurance companies are changing coverage? I think that the big issue in a lot of the Katrina related litigation was whether the damage was due to flooding (not covered) or wind (covered).

Posted by: guest at September 12, 2007 11:06 AM

You all need to read this on how insurance companies are ripping off home owners.

http://www.bloomberg.com/news/marketsmag/mm_0907_story1.html

Posted by: guest at September 12, 2007 11:17 AM

Not a homeowner in Brooklyn yet.

For those of you lucky enough to have coverage, what are you paying for say a 2 family brownstone? Or are there so many facors I am not even thinking about that the range is wide?

Posted by: guest at September 12, 2007 11:33 AM

where'd ya get that great pic?

Posted by: guest at September 12, 2007 11:36 AM

Another good reason to move to the "Heights", whichever one you chose.

Granted, it is only a matter of time until RE agents point this out in the listings.

"Great buy, $400K Heights studio, insurable and out of the flood zone". Hooray.

Posted by: guest at September 12, 2007 11:37 AM

State Farm is evil. You'd might be better off stashing your policy premiums in your mattress than paying them for "coverage".

The only thing they cover is themselves. And the only reason they have adjusters is to justify them NOT covering their customers.

Posted by: guest at September 12, 2007 11:39 AM

11:37 is right:
Another good reason to move to Stuy Heights.
"Great buy, $750K Italianate brownstone, dry basement, insurable, soon to be close to beaches and marinas".

Posted by: guest at September 12, 2007 11:48 AM

We got insurance through Chubb, but we pay a lot for it. $5,000 for a 2-story one-family house with finished English basement. We're not in the flood zone, so that's not why it's pricey. It's an annoying amount to pay, but I just know there was no way I was going to risk going with State Farm, after seeing what they're doing to people in the Gulf States after Katrina. I'd rather pay $5,000 a year and actually get coverage if something happens, than pay half that for nothing. "You get what you pay for" does apply to home insurance too.

Posted by: guest at September 12, 2007 11:55 AM

I believe Allstate's specific issue may be how saturated they are in this area leaving them with a a high exposure to a payout should anything catastrophic occur. Thus, not accepting new applications and dropping policies for whatever reason ultimately forces other companies to pick up the policies and would spread the risk around. Further, I believe they are dropping those who only have a single homeowners policy as opposed to those who also insure thier vehicles plus any further types of insurance with them. So if you have Allstate for your home and whatever else for you car, you may want to re-think that if you want to keep the Allstate coverage. Obviously Allstate is not leaving the area entirely, but does appear to be selectively cherry picking what is considers value customers. It sucks. I don't know whether or not it is ethical. The reasons are bogus, because everything above 4th Ave should be high enough above sea level to avoid a storm surge. I know 6th ave is over 100 feet above sea level and not in the flood zone maps. I have Allstate for home and two cars and got renewed. I plan on keeping it for sure because I think they are one of the better carriers.

Posted by: guest at September 12, 2007 12:06 PM

ive had policies cancelled on three different properties, neither in flood zones...in fact they are located in the highest elevations in brooklyn..

Posted by: guest at September 12, 2007 12:13 PM

This is actually worth writing a letter to Chuck Schumer. Many areas in Brooklyn are elevated (e.g. much of Clinton Hill) and are not in a flood zone even if there was a category 5 hurricane in NYC. If insurance companies are citing flood risk as a reason for dropping coverage in areas that are clearly not flood zones, then drawing some public attention to this would be a worthwhile exercise.

lp

Posted by: guest at September 12, 2007 12:19 PM

It's likely the crappy outdated inadequate storm sewer system that puts us ALL at risk of flooding in a hurricane, here. So the issue may not be who are in the flood zone or not, but who are in neighborhoods with particularly overloaded storm sewers. I always see big "lakes" at some intersections in Park Slope after every heavy rain. Which one does not see in every neighborhood. Queens has a bad problem with that.

About alerting NY State, I did hear people are supposed to do that, if their policy is canceled. It's worth posting the info here if it can be found. There's a cap on the percentage of policies the companies can cancel, and the state is watching that.

Posted by: guest at September 12, 2007 12:31 PM

I inquired about flood insurance recently. From what I see, the only thing available is a government backed policy with a maximum coverage of $250,000 for property and $100,000 for personal effects. That is not much considering construction costs here. Is it better than nothing? I'm not sure. It's not going to get you very far in your rebuilding effort.
Homeowner's insureance will not cover for a flood so those above who believe so should not fool themselves.

Posted by: guest at September 12, 2007 12:37 PM

To 11:33,

I pay approx $5,600 for 3-year coverage. I went through an insurance broker 6 years ago for my 2-fam Bstone in Fort Greene. Originally, we paid like $7,000 for the first 3 yrs (didn't know what we were doing...just took advice of broker).

Renewal came around, and by then I knew what to consider...

Liability insurance- we now have $1 mil per occurence (covers slip and falls, damage to your neighbor's property, if my dog bites you, etc.)

Replacement cost- very important to consider. Broker suggested upon renewal that at the very high end, to reconstruct/repair a bstone to its original splendor using "like kind materials", it would be around $275 per sq liveable foot (so not including your cellar). Thats what I took (seems ok).

Incidentals- if the city sewer line backs up, floods my basement, burglar break-ins,and a bunch of other stuff I'd rather not think about.

And then I had to tell them to knock off some $ from the quote they gave because I have a security system, fairly new roof, fire escape, and its a 2fam with no tenants (just my family means less liability risk to them.).

Then Im sure they consider your FICO scores and other discriminatory bs.

Obviously they'll consider how long you've been with them.
Ya gotta haggle.

In the end, its all relative... the guy up the block laughed at me when I told him my quote (said he pays like $3,000 every 3 yrs).
But then again, he's been insured for over 30 yrs and I'm sure he doesn't have "full" coverage like I do.

Posted by: guest at September 12, 2007 12:38 PM

Ditto to 11:55. We went with Chubb over State Farm on our single-family. The price was about 1/3 higher. But I was dubious about SF's commitment to covering us in a loss situation. They spit out a quote in about 30 seconds after taking only a few minimal details about our house. Other than location, type of construction and single vs. multi-family, they didn't ask about size, age of systems/roof, adjoining properties, etc. Chubb was much more thorough. The first thing that came to mind when I experienced their cavalier attitude with my application was, "Uh oh, I'm going to get what I pay for."

Allstate wouldn't take our application. The only other quote we were able to obtain was Fireman's, which was comparable to Chubb. We checked with 3 brokers (in addition to calling SF directly) and they all came back with Chubb.

Posted by: guest at September 12, 2007 12:59 PM

I'm ok with renting.

Posted by: guest at September 12, 2007 1:05 PM

There's some good informative posts on this thread.
Im about to be a condo owner and its good to know on insurance company options.

Posted by: guest at September 12, 2007 1:15 PM

Insurance company's are not stupid - greedy maybe - but not stupid.

Brookly and Manhattan are prime candidates for massive Hurricane destruction!

Regardless if you live on the top of the hill or next to the ocean, the reality is the insurance company is not covering for storm surge or flooding (that is a flood policy). Your proximatey, or lack thereof, to a flood zone is irrelevant in Hurricane (Windstorm) coverage. They are taking a gamble on some of the highest property values in the country for WIND and ensuing water damage from wind driven rain.

I work alot with insurance companys and all of you who bash them for not doing the right thing in Katrina are mislead. The folks insured down there had WIND coverage, not storm surge or flood.

The outcry of people trying to compell the insurance companies to pay for something they did not cover, and therefore did not collect premium for, is essentially the same argument as people in the subprime mess (banks and individuals) that are demanding a bailout from the government.

If you want to know why insurance company's are pulling out of New York - Look no further than Katrina. Imagine the billions and billions this liberal state will try to force insurance companies to pay even when they had no intention of covering flood damage as part of hurricane coverage.

Its all about risk people - and that risk is too great here...

Posted by: guest at September 12, 2007 1:21 PM

1:15 - Your condo association will take care of the property insurance as part of the maintenance fee. You only need to woryy about personal contents insurance which is fairly cheap.

I would try to get a hold of the condo master policy though and make sure the building has replacement cost coverage and acceptable limits at the very least.

Posted by: guest at September 12, 2007 1:23 PM

THis guy who wrote this below needs to read the Bloomberg article post at 11.17

There needs to be some sort of government oversight on insurance companies like FDA for food and drugs.

What a jerk!

******

Insurance company's are not stupid - greedy maybe - but not stupid.

Brookly and Manhattan are prime candidates for massive Hurricane destruction!

Regardless if you live on the top of the hill or next to the ocean, the reality is the insurance company is not covering for storm surge or flooding (that is a flood policy). Your proximatey, or lack thereof, to a flood zone is irrelevant in Hurricane (Windstorm) coverage. They are taking a gamble on some of the highest property values in the country for WIND and ensuing water damage from wind driven rain.

I work alot with insurance companys and all of you who bash them for not doing the right thing in Katrina are mislead. The folks insured down there had WIND coverage, not storm surge or flood.

The outcry of people trying to compell the insurance companies to pay for something they did not cover, and therefore did not collect premium for, is essentially the same argument as people in the subprime mess (banks and individuals) that are demanding a bailout from the government.

If you want to know why insurance company's are pulling out of New York - Look no further than Katrina. Imagine the billions and billions this liberal state will try to force insurance companies to pay even when they had no intention of covering flood damage as part of hurricane coverage.

Its all about risk people - and that risk is too great here...

Posted by: guest at September 12, 2007 1:21 PM

Posted by: guest at September 12, 2007 1:33 PM

Not a jerk - just a different political philosophy I guess...

I happen to think that people take risks every day and need to be responsible for those risks. Sadly most people dont understand insurance and just want everyone to pay pay pay when the risks we take end up hurting us.

Government does regulate insurance and addresses all complaints seriuosly.

But not understanding the risk you take (i.e. buyng a house in a hurricane zone, next to a raging river, or 2 feet above sea level) and how that can effect you is not the business of the government.

Maybe we should get rid of the entire insurance industry all together and let the government (i.e. tax payers) just pay everyone when anything goes wrong in our lives.

BTW - I read the article - seems to me the biggest disconnect is with replacement cost coverage versus actual cash value.

"They only offered to pay half the cost of fixing the damage..." If you have a ACV policy it doesnt pay to replace or fix damage, only what the depreciated value of the property was worth at the time of the loss...

Read your Policys! You get what you pay for.

Posted by: guest at September 12, 2007 1:47 PM

I, too, was dropped by ALLSTATE but told that my fate could have been different if I had multiple policies with them and not coming off a three year cycle. I was also told that my rate was going to shhot up 33% anyway, if they didn't drop me.

Posted by: guest at September 12, 2007 1:58 PM

We just bought a three story 2 family bstone in Park slope. There were very few options for coverage. Chubb were the most expensive but came with very good reputation in terms of settlement. We finally went with AIG on the back of a recomendation from our Broker. Our Bill is ~4k for + $352 for flood insurance.

Some things to consider - that will impact premium.

Replacement costs
Underlying mortgage (your mortgage company may have a minimum coverage amount)
Deductible
Home security (this can save you 10-20%) so effectively pays for itself.

We went through Bollinger insurance brokers. They were very helpful and also offered us Chubb. 973 921 8141

Other than these two providers everyone else turned us down.

Posted by: guest at September 12, 2007 1:59 PM

Guest 1.21. No one is saying insurance companies are dumb, rather people have a problem with the argument that flood risk (due to a storm surge from a hurricane or heavy rains) is a reason for non-renewal of a policy for a property that is outside of the storm surge flood zone for a category five storm. Risk should be analyzed on a more granular level when looking at potential hurricane damage, rather than a city wide policy. To implement a blanket rule with respect to all of NYC is actually not in the financial insterests of an insurance company I would imagine, since such a policy would mean that low risk properties would be ignored, and potential customers lost.

These houses have weathered several hurricanes over the past 100 to 150 years, and many of them are on ground that is outside of the predicted worse case category
5 hurricane storm surges. That is why people are frustrated.

lp

Posted by: guest at September 12, 2007 2:00 PM

2:00 - I get what you are saying, and again I dont want to seem like an insurance company apologist or anything. I just want to help people understand the Insurance company perspective and why they are in this situation.

I think they are not covering because the potential hurricane wind damage not necessarily flood. But certainly in the back of their mind is the thought that they are battleing intense litigation trying to force them to pay for uninsured flood damage in a city of 500,000 with relatively low property values. Imagine New Yorkers trying to compel them for the same thing in a city of 8 miiilion+.

Unforuntunately insurance in not a granular industry. Its all about statistics, figures, and risk, your house being 500 or 2000 feet from the nearest flood zone may not be part of the equation.

I too feel the sting, but although I dont agree, it is the unfortunate circumstances we are living in.

Posted by: guest at September 12, 2007 2:12 PM

YOu still have not read the Bloomberg article.

Fact is insurance companies are making record profits! Some worse than others obviously. Train their people to come in low on estimates consistently - to tire out the home owners so they settle for what is offered- is one of the tactics that is used and documented.

YOu can read your policy but if the insurance company decides how little they want to pay you, or doesnt come in on replacement cost, the home owner has no option other than to sue- most people dont cause they dont have money for the lawyers, and most stupidly settle for what is initially offered.

Not a jerk - just a different political philosophy I guess...

I happen to think that people take risks every day and need to be responsible for those risks. Sadly most people dont understand insurance and just want everyone to pay pay pay when the risks we take end up hurting us.

Government does regulate insurance and addresses all complaints seriuosly.

But not understanding the risk you take (i.e. buyng a house in a hurricane zone, next to a raging river, or 2 feet above sea level) and how that can effect you is not the business of the government.

Maybe we should get rid of the entire insurance industry all together and let the government (i.e. tax payers) just pay everyone when anything goes wrong in our lives.

BTW - I read the article - seems to me the biggest disconnect is with replacement cost coverage versus actual cash value.

"They only offered to pay half the cost of fixing the damage..." If you have a ACV policy it doesnt pay to replace or fix damage, only what the depreciated value of the property was worth at the time of the loss...

Read your Policys! You get what you pay for.

Posted by: guest at September 12, 2007 2:13 PM

2:13 - Point well taken. But please bear in mind I am not saying they are angels, only explaing why they are raising premiums and pulling out of lower New York markets.

If they really intended to not pay people for their losses wouldnt they just collect the huge premiums New York offers and then just not pay them when they make a claim.

Record profits or not, this is what is going on in the risk markets...

You do have a choice you know.

Posted by: guest at September 12, 2007 2:20 PM

2:20 Some viable choices are to live in Canada or Idaho where it is not prone to hurricanes, earthquakes, and tornadoes. Canada would not be a bad idea for most Park Slopers, they have socialized just about everything there for them. Utopia!!!!

Posted by: guest at September 12, 2007 2:41 PM

AllState 's net income was 5 billion last year in 2006

and excerpt from Boomberg article:

One State Farm policyholder in Mississippi was Senator Lott, who lost his home in Katrina. He sued State Farm for fraud in U.S. District Court in Jackson, after the insurer ruled that his home had been damaged by water and refused to pay him anything. "It's long overdue for this industry to be held accountable," Lott, 65, says. Lott and State Farm agreed to a confidential settlement in April.

Lott has introduced legislation to have insurers regulated by the federal government. That would supplant a patchwork system of regulation by states. Insurance has no body analogous to the SEC, which can refer cases to the Justice Department for criminal prosecution. That doesn't happen with insurers. The most that state insurance departments typically do is impose civil fines when companies mistreat customers. Such sanctions are weak and infrequent, says Hunter, the former Texas insurance commissioner. Before Katrina, no state or federal prosecutor had ever investigated a nationally known property-casualty company for criminal mistreatment of policyholders. Mississippi Attorney General Jim Hood says a federal grand jury is probing insurance company claims handling after the hurricane.

Posted by: guest at September 12, 2007 2:43 PM

2:41 - 2:20 Here.

Well played. I think another choice would be to skip the letters to Chuck and just get Michael Moore on the case. Maybe he will insure all of us with the money he makes on the documentary...

No but seriously, the choice of where you live involves more than than just the price for the property and the taxes you pay.

Also, you could, dare I say it, self insure.

For those who dont know what that means - Basically, if you are so convinced that you are immune to Hurricanes, simply skip the windstorm coverage and put money away into an investment account every month instead of paying premium.

Just remember you are taking a risk! Just like the risk you are taking when you buy windstorm coverage. (i.e. the risk that you are paying money because you WILL have hurricane damage)

Posted by: guest at September 12, 2007 3:23 PM

Just in case you didnt know, it has been widely speculated that FEMA flood maps are woefully inaccurate.

Just ask the people in Texas living in "500 Year Flood Zones" that have been flooded several times in the last few years...

Posted by: guest at September 12, 2007 3:27 PM

My parents live in Suffolk County and had their rates doubled last year. Also, my boss lives in northern Queens and has been complaining about getting dropped a few months ago.

Posted by: guest at September 12, 2007 5:11 PM

I have Fireman's Fund and I am pleased - pricier than most others (except maybe Chubb). To get the pricing down, you really have to look at what's in the "umbrella" - if you don't need auto coverage - get it out!

Posted by: guest at September 13, 2007 7:47 AM

Carol -- I think we have renters' insurance with Allstate. But we have had it since maybe 2000, so we might be grandfathered in.

Posted by: guest at September 13, 2007 9:02 AM

Predicting exactly when a hurricane is coming is simply not possible. We are not "overdue" this year any more than prior years. That major hurricanes are predicted to come only come every 70 or so years does help us assess the risk. IT MEANS EVERY YEAR THE ODD OF A HURRICANE ARE ABOUT 1 IN 70. It doesn't mean that if we get a hurricane, we can relax for the next 70 years! Or that we are "overdue." agree?

Posted by: guest at September 13, 2007 10:20 AM

I agree 100% 10:20. But even estimates of 1 in 70 years are based on woefully inadequate records dating back only 150 years or so.

The reality is that we live in a tier 1 hurricane zone, which means a hurricane can hit us any time. For those global warming zealots out there the odds are even higher due to higher ocean temps, etc.

People are just starting to feel the pinch of reality that NY is a tier 1 hurricane zone, and like it or not it is a very real possibility we will get hit, and the damage will be many many billions of $.

The cost of insurance is just now catching up with reality - that's just another premium we pay to live in the greatest city.

Posted by: guest at September 13, 2007 1:57 PM

A bit late, but in case anyone is interested in where the flood zones are:

http://home2.nyc.gov/html/oem/downloads/pdf/hurricane_map_english_06.pdf

Posted by: guest at September 17, 2007 11:35 AM