N.J. Flood Insurance Numbers Released One Year After SandyConstruction Companies Weigh in on Costs Vs. Average Payout
Some $7.85 billion has been spent on Superstorm Sandy by the National Flood Insurance Program, the low end of what was estimated to be between $6 billion and $12 billion worth of flood damage immediately after the storm.
That estimate helped the NFIP earn a 50 percent increase to its borrowing capacity (from $20 billion to $30 billion) in January. At that time, the NFIP was about $17 billion in debt, mostly due to costs from Hurricane Katrina, effectively leaving the NFIP with about $13 billion to work with for Sandy.
Despite having about 17,500 fewer claims than New Jersey, where the storm made landfall, New York received close to the same amount of total flood insurance money as the Garden State: $3.57 billion for New Jersey and $3.36 billion for New York. The Empire State also had less than half of the number of claims closed without payment (CWOPs): 3,109 to New Jersey’s 6,536.
One year after Sandy, the NFIP has closed 99.6 percent of the approximately 144,000 total claims for Sandy, 74,508 of which came from New Jersey.
This and other information was contained in a Federal Emergency Management Agency report sent to The SandPaper on Oct. 28 that details all NFIP expenditures by state for damages related to “Meteorological Event Sandy.” FEMA administers the NFIP.
The NFIP remains the only way for Americans to purchase flood insurance policies, is required by anyone with a mortgage living in a floodplain, and usually involves the maximum $250,000 worth of coverage. The program also utilizes 84 private insurance companies as part of its write-your-own program that began in the 1980s.
Those companies and the NFIP directly paid on average just about $55,000 on closed claim payments for Sandy as of Oct. 28. Claims from New York received on average $10,000 more than those in New Jersey, about $62,000 for New York versus about $52,000 for New Jersey
This raises the question as to whether that $52,000 average payment is enough to typically cover damages from Sandy in New Jersey.
Adam Van Nevius, owner of Coastal Restorations in Manahawkin, said that figure seems low based on what he and his company have seen from the approximately 60 houses they have rebuilt since Sandy. Construction has been a tradition in his family since 1946, and Coastal Restorations was begun in response to the need that existed in the area following the storm. It has seen constant work since.
“That’s a low number to me,” said Van Nevius, describing the average $52,000 claim payment. “There’s been a few of my customers that were low-balled, but the majority has gotten pretty much what they needed minus their deductible and their depreciation.”
Coastal Restorations has done 85 percent of its rebuilds on LBI and the rest in the Beach Haven West portion of Stafford Township, according to Van Nevius. Many customers are just now getting to house-raising, he said, as a focus for many on LBI was to ready homes for summer rental income. The minimum price is $50,000 for house-raising, which well over half of the homes his company has worked on require.
Van Nevius said he has dealt with “a few” jobs in which a customer had either raised or rebuilt his or her home first, then run out of money to do the other.
“The people that got around $50,000 – some got $60,000 – those are the ones where it doesn’t quite cover enough.
“It varies on the size of the house, but 50 grand doesn’t cover the kitchens or the bathrooms. That basically covers your cleanout, electric, plumbing, sub-floor and Sheetrock. Kitchens and bathrooms are the most expensive part of your home anyway. The cost is not there for me to come in and redo a kitchen. Your average kitchen is $20,000.” A bathroom, he said, would involve replacing a bathtub or shower, with the average minimum cost for a new tile shower being $8,000.
“Those numbers add up pretty quick, and for $52,000 it’s just not there,” said Van Nevius, adding that only about 15 percent of his customers received around that NFIP average payment.
Floodwater height does affect repair costs, though perhaps less than one might expect, he added. “Even if you only had 4 inches of water in the house, it buckles the floor, and you’re redoing the floor, your Sheetrock, your molding, electric, cabinets; it never ends. In all actuality, it doesn’t matter if the house had 6 inches of water or 4 feet of water because you still have your ground level that’s shot.”
Janzer Builders of Manahawkin has done 95 percent of its work on home restorations on the mainland in Beach Haven West, according to co-owner Stacy Janzer. Her company has completed about 20 “put-backs” – the term given for when a customer simply wants his or her home rebuilt as it was before the storm. Janzer said the majority of her customers are building anew, the cost of which is currently averaging about $350,000 in Beach Haven West.
Those having to settle for “put-backs” are also those receiving about $60,000 total in flood insurance payments, according to Janzer, just above the NFIP’s average.
“Most of these houses are not worth rebuilding,” said Janzer. “And when we do have to put them back together it’s a sin. The majority of these homes should be completely rebuilt.”
When asked if the NFIP has given enough money to residents to rebuild after Sandy, FEMA officials said, “The insurance companies are instructed to pay policyholders for all covered losses. FEMA’s top priority is to provide assistance to those in need as quickly as possible, while also meeting our requirements under the law. To do this, FEMA works with its private sector, write-your-own insurance company partners who sell flood insurance under their own names and are responsible for the adjustment of their policyholders’ claims.
“FEMA will not be satisfied until policyholders have received payments for all covered losses. Policyholders who have concerns with their insurance companies can reach out directly to FEMA by calling 1-800-427-4661. When a claim or any part of a claim is denied by the insurer, the policyholder may also appeal that denial directly to FEMA.”
“I have extensive experience with working with insurance companies,” said Van Nevius. “What I have done is look over copies of claims (homeowners) got and went through them with a fine-tooth comb and found some things they missed. They have gone back to the insurance company or I have dealt with them directly and we have been very successful with getting them extra money. There’s usually an extra $10,000 floating out there.
“Insurance companies like homeowners because they don’t understand the whole process, and when a contractor writes a letter where they have legitimately left things out, we can correct that.”
Mortgage companies that “become the overseer,” as Van Nevius put it – as they must sign off on all flood insurance payment checks to make sure the money is being used to repair a home – most often dole out the total claim payment in thirds, where each subsequent third is given out upon the inspection of the completion of each third of the work done previously.
“Basically what happens is it takes about two weeks to get them out there for inspection. A lot of times we’ll have the job completed by then and I’ll get paid 30, 45 days later. The way I’m looking at it is I’m laying out thousands of dollars ahead of time to get these people back into their homes. Otherwise, we have five or six jobs we run at one time – it’d be a nightmare, and we’d be going back and forth.
“Some contractors go in and say, ‘I need half down or 30 percent down,’ and homeowners don’t have that because mortgage companies have their check tied up. Then they can’t do the work. I just have taken the stance that this is America – the mortgage company will pay; they’ve got the money. Let’s get the community back together; that’s the main thing.”
FEMA officials did not comment on whether there was any understanding between the NFIP and its write-your-own companies to be cautious over amounts paid out on flood insurance claims for Sandy knowing that the higher end of the NFIP’s original estimated total damages ($12 billion) would leave the NFIP near its full borrowing capacity. Some people wonder if there was a move to limit payouts to leave some borrowing capacity available should some other large-scale flooding befall the United States in the near future. FEMA officials also did not comment on whether there are any current investigations in regard to practices in the aftermath of Sandy by any of the 84 WYO insurance companies that sell NFIP policies.
— Michael Molinaro