Newspaper article The Record (Bergen County, NJ)

Insurers Limiting Damage Coverage

Newspaper article The Record (Bergen County, NJ)

Insurers Limiting Damage Coverage

Article excerpt

Many New Jersey homeowners may be faced with bearing the brunt of costs to repair damage caused by Sandy, according to a consumer advocate.

Insured losses will run into the billions of dollars, and some flood victims have no flood insurance, and those suffering wind damage may face higher deductibles and limited coverage because insurers have taken steps to limit their exposure as extreme weather events become the norm.

"We are concerned families will have to dig deeper into their pockets because insurers have been steadily shifting liability to consumers by increasing hurricane wind coverage deductibles and imposing other policy limitations," said J. Robert Hunter, director of insurance for the Consumer Federation of America, based in Washington, D.C.

Although the state commissioner of banking and insurance has ruled that expensive hurricane deductibles will not apply in New Jersey for this storm, "there are limits on replacement costs and other new limits in coverage that will be unexpected by many," said Hunter.

While much of the damage from Hurricane Irene, which hit New Jersey in August 2011, was caused by drenching rains that sent inland rivers over their banks, much of the destruction from Sandy is from an unprecedented storm surge in tidal areas.

In both cases, affected homeowners must have government flood insurance to be covered for the damage caused by the water.

The National Flood Insurance Program paid out $1.28 billion from Irene; flood claims from Sandy are expected to be higher.

But the NFIP coverage, which is generally provided through private insurers, is less generous than it was in the past, and premiums will get much costlier in the years ahead, increasing by as much as 25 percent this year for some property owners.

"Flood insurance is not truly an indemnity policy," said Lydia Bashwiner, general counsel and claims manager for Otterstedt Insurance Agency in Englewood Cliffs. It won't pay for most damage in finished basements, for example, and "it won't pay to put you up in a hotel," she said. "But it's the best we have."

"The flood insurance is very restrictive; it's not a great policy," said Alan Geisenheimer, owner of Geisenheimer Agency in Fair Lawn.

Geisenheimer had to run a generator, acquire wireless Internet service from Verizon and switch business calls to his wife's cellphone to get his business up and running Wednesday to accept claims from customers.

The claims pouring into the Otterstedt Agency on Wednesday were very similar to types of claims filed in the aftermath of Irene in 2011. But instead of claims related to inland flooding, they include "a lot of flood claims in coastal areas and on the Hackensack River," Bashwiner said.

State Farm, the top home insurance underwriter in New Jersey, insuring one in every eight homeowners in the state, as of Wednesday afternoon received 24,000 Sandy-related homeowner claims in the mid- Atlantic and northeastern states, as well as 3,000 auto claims. …

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