Business Notes

New Alternative to National Flood Insurance

More Coverages, Less Cost in Van Dyk Group Program
By MARIA SCANDALE | Feb 15, 2017

Flood insurance buyers, faced with risen costs since Sandy, may now have customized, comprehensive options offered through The Van Dyk Group through several private flood insurance programs.

Among these private market options, The Van Dyk Group has developed its own flood insurance program through Lloyd’s of London. Policies can offer reduced premiums and provide coverage options that were not previously available through the National Flood Insurance Program.

“We can now save many people money and customize your flood insurance to meet your needs with our exclusive program,” announced Van Dyk Insurance Services. “This private flood insurance coverage meets all of the provisions required by federal regulations."

The background is that property owners on and around Long Beach Island have seen their flood insurance premiums with the NFIP go up significantly each year. While most annual increases range from 5 percent to 25 percent, there are some extreme cases where prices will double, triple or even more in a single year.

Some after Sandy were surprised when they realized that their flood policies did not cover their home’s total value, among other shortfalls, and the terms of an NFIP policy are not always easy to understand.

As an alternative, The Van Dyk Group has devised private market coverage that offers “increased coverage options,” “pricing flexibility” and “lower fees.”

More specifically, policyholders can now benefit from: building coverage of up to $1 million; coverage for loss of rental income; coverage for displaced homeowners to live elsewhere while their home is repaired; and multiple deductible options and discounts.

“In many cases we are able to help business as well as homeowners with our alternative flood insurance options,” said Jeff Wyrsch, vice president of personal insurance with The Van Dyk Group.

To outline additional coverage options in the company’s exclusive program, the first are heightened coverages of building and content value. “For homeowners, the NFIP does not provide more than $250,000 of coverage and a maximum of $100,000 for personal property (contents),” Wyrsch explained. “Our in-house program can provide up to a million dollars on the building and up to $250,000 in personal property coverage.

“We can now provide replacement cost coverage on personal property; as well as replacement cost coverage of the building itself on secondary homes, which is not available on NFIP policies.”

“‘Loss of Use’ is an additional, valuable coverage we are able to offer homeowners. Loss of use will pay for the primary homeowner to stay somewhere else while the house is being repaired from a flood,” listed Wyrsch, “while Loss of Rent can be covered by providing documentation showing that the house could have been generating income for rent and it was lost due to flooding.”

Vacation homes have been hit harder by cost hikes than primary homes. Therein lies another case where the private insurance can help.

“The government has established additional fees for vacation homeowners. Our program can help those people save money on their flood insurance. We don’t have those additional fees for secondary homes.”

Underwriters from Lloyd’s of London came to the Island again recently to meet with Van Dyk principals and to see the types of homes and businesses it will be insuring. “They did investigate our research, our rates, the risks that we were looking at. They feel very confident about the program.”

One of the most frequently asked questions concerns mortgages. Wyrsch can assure of the programs’ acceptability. “These private-market programs are generally accepted by mortgage companies in place of an NFIP policy.

“Another important point is that the coverage provided by a private flood policy is guaranteed to be as extensive as NFIP coverage, if not better,” Wyrsch assured. “It’s a law that any private flood insurance policy must provide at least the same level of coverage as an NFIP policy.”

Alternative Developed

To Answer Need

Wyrsch said there are some cases where it is still worthwhile to have an NFIP policy instead of changing to the private market. But he added, “In many cases and especially in cases where the premiums have gotten extremely high, we can help most get better flood insurance rates.

“We have had many cases where people have come to us thinking they had no other options to be able to reduce their flood insurance cost, and we have in many cases been able to help. We have seen premiums over $10,000 and over $20,000, and we were able to provide them with an affordable option without reducing coverage.”

Wyrsch further detailed how the initiative developed, in an interview for The SandPaper’s business column.

“The NFIP in the past has been the only provider of flood insurance, for the most part. There were not very many options for people other than that program,” he said.

“In recent years, due to federal regulations, prices have been going up very dramatically with the NFIP – some quadrupled overnight, some went up 5 to 8 percent – and new regulations were only making it compound even more.

“So, shortly after Sandy, our biggest flood disaster we’ve had in my lifetime, I started looking into alternate programs to the NFIP. One of the avenues that I pursued, and we pursued as the Van Dyk Group, was to create our own product with Lloyd’s of London.”

Wyrsch added that over the past few years, several private market flood insurance options have become available as an alternative to the NFIP, but “most of these really will only help a small minority of the people who live in flood zones,” he said, referring to older homes. “So, we decided to make a program that would apply to the majority of people who live in flood zones, especially on the Jersey Shore.”

The Van Dyk Group is the only agency in the area to have devised its own private market insurance program, company representatives said. The company does also carry three other private programs besides its own, and of course still offers NFIP policies.

Most homes along the state’s shoreline are at least somewhat elevated, whether they are situated over a crawl space or on pilings, “and we can now provide our private flood product to most of those homes at rates less expensive than the NFIP.”

So far, customers have been “very pleasantly surprised,” Wyrsch said. Some of the first customers were existing clients whose policies were up for renewal at the time the new offering rolled out. They were offered the new choice and were able to “save money and get better coverage,” he said.

“People are generally looking for other options, and I think being able to provide that is a very important and valuable opportunity.”

For more information, call the Van Dyk Group offices: 275 Route 72 East, Manahawkin, 609-597-1988; or 12800 Long Beach Blvd. Beach Haven Terrace, 609- 492-1511; or 500 Barnegat Blvd. Suite 300, Barnegat, 609-698-6900. The toll-free number is 888-826-3951.

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