Streams

Flood Insurance Claims Delayed and Diminished

Friday, March 01, 2013

WNYC

Many New Jersey homeowners badly-affected by Sandy are still struggling to repair their damages and rebuild.  But thousands who filed flood insurance claims months ago, have yet to receive the money they need to pay for that work. That's causing a lot of finger pointing from Trenton to Washington.

Among the people still waiting is Doug Swallow, whose condo complex sits about a hundred yards from the beach in Long Branch, New Jersey.  The first floor of his unit took on about five inches of water during the storm, destroying several computers and pretty much anything he’d left on the floor.  

“Three of the units are lower than the units that I’m in, and they’re also closer to the ocean,” Swallow said.  “And their entire first floor was destroyed… took out a wall that was facing the ocean, and just decimated everything that was inside.”

The condo association residents applied for FEMA assistance shortly after the storm, and  their initial contact was great, he said. The agency sent an inspector quickly and e-mailed a report the very next day.  

But FEMA hands off the processing of federal flood insurance to private insurance companies.  Swallow and his neighbors contacted their insurer and filed a claim, but then their progress seemed to come to a halt. 

So far, the residents have only gotten an initial check for 25-thousand dollars, out of a total of about 200-thousand that they say they’re due.  In the meantime, they’ve had to dig into their own pockets to begin doing repairs.

“I feel like I need an insurance policy against the insurance companies,” Swallow said.  “It’s ridiculous to think you have to wait four months before you can start.  If we didn’t put up the money ourselves, we wouldn’t yet be having a contractor even giving us estimates, let alone beginning to work!”

(Doug Swallow stands in his condo as repairs still need to be completed. Scott Gurian/NJPR)

Swallow’s experience of waiting months for Sandy flood insurance money to arrive has been shared by thousands of residents along the coast.  Governor Christie has called the handling of claims “a disgrace,” and Congressman Frank Pallone (D-Monmouth) recently wrote to FEMA that it’s unacceptable for people who’ve paid flood insurance premiums for years to be “left in the lurch when they need the assistance most.”

In response to inquiries from WNYC, FEMA issued a statement saying they’ve made changes to speed up the process and get assistance to storm victims as quickly as possible.  The delay, the FEMA statement said, is with  private insurers who process the claims.  

FEMA has put private insurers in charge of making the pay-out determinations based on government rules. That puts the private insurers  under a lot of scrutiny following an event like Sandy, especially by politicians nervous about fraud or abuses in the system, according to Don Griffin of  PCI, an insurance industry lobbying group.

“After many of the storms, companies are audited,” Griffin said.  “And they’re audited based on how they settled their claims by the flood program.  And frankly, if it turns out that they paid money they shouldn’t have, then they will be liable out of that company’s pocket.  Because basically, they have the taxpayers’ checkbook.”

Governor Christie has written to the state’s Congressional delegation, complaining that the threat of FEMA second-guessing the judgments of insurance companies has sent a chill through the entire claims process and the delays are intolerable.

Meanwhile, Congressman Pallone says Washington needs to understand that the delays are having negative consequences for homeowners, towns and the entire economy of the Jersey Shore.

“I just don’t think it’s fair to just say, ‘Well… it’s federal money so therefore it’s gonna take longer.’ That doesn’t make any sense,” Pallone said. 

Last week, after months of waiting, Doug Swallow and his neighbors  finally got a statement from their insurance company, detailing what will be covered under their flood insurance.  Though they thought they had pretty good coverage, they were disappointed and surprised to see their claim was reduced by a third. 

Now they plan on appealing their settlement, which means it could be several more months before the money finally arrives.

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