Thursday, February 28, 2008

Big Changes in Long Island Flood Insurance

Aaron Stein, Long Island Insurance By Aaron J. Stein

Hello all, and please accept my apologies for not having written a blog entry in quite some time. But this morning's Newsday article regarding flood insurance had something in it that got me so frustrated that I had to write.

The article is about the re-mapping of flood zones on Long Island by the FEMA, the government agency in charge of the national flood insurance program. They are using new equipment and techniques to reevaluate all the flood maps which may or may not result in people now being required by their bank or mortgage company to carry flood insurance where they may not have been required before.

FEMA is suggesting that some who live near a flood zone are currently outside of it might want to think about purchasing flood insurance now because the price may change dramatically if they are included in a flood zone after the new maps are issued. For instance right now someone who is not in a flood hazard area here on Long Island would pay under $400 for the maximum flood insurance available from the government. If your house is deemed to be in a flood hazard area when the new maps are complete your rate could easily be four to five times higher.

Under FEMA rules, if you have a flood insurance in place and your zone changes you grandfathered in to the old zone for as long as you keep your insurance in force. So if you live close to a flood zone but outside it you might want to think about buying one of the inexpensive policies now. If you end up in a flood zone and your bank requires the coverage, you will be locked into the lower rate. If you remain outside of flood zone under the new maps, you could cancel the policy after a year if you wish. (FEMA will not allow a policy to be canceled in the middle of the year unless you sell your home)

My problem is that in the article there is a quote from County Executive Steve Levy saying that homeowners should be allowed to make their own decision on whether to carry flood insurance or not, as opposed to having that decision made for them by FEMA or their bank. The fact is that we hear every day from people who are only buying flood insurance because their bank is forcing them because of government regulations. They feel that the fact that they've never seen a flood in their home means they will never be flooded. Unfortunately this is not the case and we only need to look at the ongoing problems resulting from hurricane Katrina to see that.

In addition, the idea coming from the County Executive that people should be able to choose which government programs and mandates they participate in and which they choose not to is absurd. If that were the case most people on the South Shore would probably still have cesspools in their backyards except that the government mandated participation in the Southwest Sewer District in order to protect our drinking water in the long run. The same logic is behind a part of our sales tax collections which go to fund open space purchases.

And how about school taxes? I have no children in school anymore. Can I opt out of school taxes because I no longer see the direct benefit to me? I found this to be a very irresponsible statement by the County Executive and contrary to the whole reason for the existence of virtually every government program. It's fine to be a fiscal conservative with the general opinion that government should take the least role possible in people's day-to-day lives. However say that these decisions should all be left to the individual homeowner and rely on them to make the best decision for everybody for the long-term simply does not work and is not valid.

4 comments:

James Orr @ Analyzed Deals said...

This is not just a problem on Long Island. This is a national problem and the implications of increased rates will be felt in many real estate markets.

Anonymous said...

Support Federal legislation that will expand the National Flood Insurance Program to include windstorm coverage. The House of Representatives passed the Multiple Peril Insurance legislation last September as part of the reauthorization of the Federal Flood Insurance Program (H.R 3121). This legislation also prohibits insurance companies that contract with the flood insurance program from using anti-concurrent causation language to exclude coverage of wind damage where flood also contributed to the damage.

The companion Bill (S.2284), which is stalled in the Senate, needs to be amended to include Multi-Peril Insurance. Several Senators have expressed support for the amendment. With over 53 percent of the U.S. population residing in coastal counties, spreading the risk geographically would form a more stable insurance pool and provide more affordable coverage than is currently available in the state-by-state system. When a multi-peril policy is available to all U.S. residents, private insurers who have abandoned coastal areas will again be able to offer property insurance coverage without the excessive risk they currently fear.

The sooner this legislation is passed, the sooner coastal agents will again be able to offer comprehensive property coverage to their customers.

Now is the time to contact your U.S. Senators and ask them to support efforts to amend Senate Bill S.2284 to include Multi-Peril Insurance. Also, please email your friends, relatives and colleagues through out the nation and ask them to do the same. Click here to find contact information for your State Senators: http://www.senate.gov/

Anonymous said...

If you don't like the idea of Flood Insurance move away from the water. If you don't like high cost School taxes leave New York. I've heard enough from Senior Citizens who do not want to contribute to a town because they don't have children attending school. Long Island's educational system is second to none in this country. If you want to be relieved of School taxes move out of New York. Clearly New York is not retirement friendly. I fully intend on leaving this State once reaching retirement age. High taxes provide for (and attract) excellent teachers. Keep Long Island thriving and renewing. Retire and move on.

Anonymous said...

Living on the south shore of Long Island for forty years and never had a major flood....I will git flood insurance now to keep it inexpensive should our gov't chose to include my neighborhood in a high risk area....right now I live about 1/2 mile from the bay. $400 or possible $3000....I'm taking the lesser of two evils.