2012 Nov 20th

Insurance – the New “Must Have” Home Accessory

Post Sandy Insurance Concerns


From City Hall:

In a meeting with Housing and Urban Development Secretary Shaun Donovan, who President Obama has tasked with leading the Sandy recovery effort, and Senator Robert Menendez, Mayor Zimmer stressed the need to address the inequity in the National Flood Insurance Program (NFIP). The program provides only limited benefits to those who live in garden level apartments, despite requiring that they pay for coverage. In addition, since NFIP only covers individuals, damage to common areas is typically not covered because they are the responsibility of condominium associations, which are registered non-profits. This is problematic for the building’s residents since the individual property owners are ultimately responsible for the condominium association expenses.

Secretary Donovan noted that he and the federal government are working to ensure that better and more assistance becomes available, and that in order to do so, everyone that was affected needs to register with FEMA.

Mayor Zimmer has also raised her concerns with Vice President Joseph Biden during his recent visit to Hoboken and with senior officials from FEMA.

Hoboken residents are learning more about flood insurance than ever before – and finding out that often times they are paying for insurance but not receiving coverage.  This has to do with Elevation Certificates, Base Flood Elevation, and a lot more technical FEMA jargon.  What it basically comes down to, is that, according to Floodsmart.gov, the Official Site of the National Flood Insurance Program, you are not typically covered for much damage to parts of the building below the lowest level of “living space.

If you have a basement with storage bins, or a garage and lobby on the first floor with apartments above, the basement and lobby & garage level, the contents of the basements and improvements made to the lobby may not covered by flood insurance.

Renters Need Insurance Too

I am shocked at how many owners in Hoboken do not have ordinary homeowner’s insurance policies.  The liability risk is huge.  Take, for example investors, many of whom bought their units long ago and have paid of their mortgage.  They often don’t have insurance on their units.  This is inexcusable.  Anyone with a mortgage has insurance because the lender requires it.  Why do you think the bank requires it?  It’s the prudent thing to do.

Even if you rent, you should have a renters policy to cover the contents of the apartment (your clothes, computers, furniture, etc.) and to protect you from liability claims.  What happens when a delivery guy walks inside your door, slips and falls and cracks his head open?  It’s not expensive – get insurance!

It is unfortunate that it often takes a disaster like Sandy to make people realize they have been irresponsible.  It is not too late.  If you are on the board of your condo, it is time to take a close look at your current association policy.  If you are a homeowner, call your agent and go over your coverage.  If you rent, call and agent and get coverage if you don’t have it.  People may call Sandy a once in a hundred year storm but I bet the next one will be a lot sooner than that.

  1. Kimberly

    We have a condo unit in a small, six-unit building on Jackson. The premium for our Flood Policy is well over $12K/year. The premium is high due to our zone/elevation/layout and the fact that we are buying insurance as a Condo Association. (As a reference point, we have single family property in the same flood zone – AE (different elevation by 2′ and on a slab) but buying as a single family the premium is just $500/year)

    Being that we are on Jackson Street, we are no stranger to flooding.

    Here is my issue though: Hoboken adopted the National Flood Map in 1982, which ** in my understanding*** means that a building constructed after 1982 in a flood zone should be built on a concrete slab/without a basement. Our building was constructed in 1986. Somehow the builder was able to install a Common Area (storage, laundry room, and electrical room) in a “basement.”

    The irony, when we flood we almost always get paid out by our Sewer Back-up Policy and we are spending $12K for flood because mortgage companies want to see 100% flood coverage on loans (otherwise the new buyer needs a personal policy to make up for the deficit.)

    Here is the question:
    I understand that some buildings with basements were grandfathered in and have lower premiums because they were built prior to the city’s national flood plan adoption. Anyone know if this is true? If so, any suggestion as to whom I should contact to rectify/see if we too could be grandfathered… The premium is so high and I feel as though someone in the building department let this design flaw slide, which is making our association poor.

    Our FEMA Rep suggested contacting the NJ Insurance Commission. Would love to know if anyone else has dealt with this issue – specifically in Hoboken.

  2. Craig

    Buildings built before 1982 actually have better coverage because they were grandfathered in pre-FIRM. Post-FIRM buildings are buildings built after the effective date of the first Flood Insurance Rate Map (FIRM) for a community – 1982 for us. Kimberly’s building may gave been completed after 1982, but it’s design and approval may have been prior.

    My building on Adams street is a post-FIRM build (2002) elevated structure – meaning no basement and no utility equipment near ground level. As a result, our $2 million flood policy was useless. Basically the first residential level on the second floor 10-12 feet off the ground is where coverage starts. When is that ever gonna flood? NFIP coverage for newer buildings appears meant for an end of days event, in which case we’re all dead anyway, so who cares? Our lobby, storage room, and elevator took the hit and we’re mostly on our own to repair them. Ironically, FEMA denied us because we have flood insurance – ignoring the fact that the feds know full well it doesn’t cover most of our actual damage.

    Our association’s premium is $2500 per year with a $5k deductible. Since the policy is basically useless anyway (yet still required to get a mortgage in the building), we plan on raising the deductible as high as possible to lower the premium. Our association was better off not carrying any flood insurance and putting that $2500 premium into the bank each year. We would have had $25,000 to repair the building with. As it now stands, repairs will cause our reserve to be nearly exhausted and we have to charge a $1k per unit assessment to replenish it. Good times.

  3. Basement Condo

    I am on a board of a condo that has ten basement units that all flooded heavily in Sandy. Six feet each unit. We had full flood on each unit, but NFIP only pays for basement coverage and the Condo Association Policy is a bare walls policy. Meaning we only do Sheet rock back, we don’t even tape and spackle and owners have to put in own kitchens and bathrooms etc. Owners with their own flood policies got denied, FEMA called them basements, so no contents or improvements. Primary homeowners got FEMA help but the rest got nothing.

    Now all units are unmortgagable due to fact you cant properly insure them. Nothing to do with Sandy but new Fanni and Freddie want the units properly insured for at least mortgage amount. Since you cant insure for the inside of unit since FEMA calls it a basement no mortgage.

    So now you have no real flood insurance and a mortgage is near impossible to get.

    Basement/Garden Condos in flood zones are in a bad situation and no one seems to care.

  4. Lori Turoff

    Maybe people shouldn’t be living in basements in flood zones.

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