Fall is often referred to as the most beautiful time of year on Long Island, but it is also the heart of hurricane season, which officially lasts through November 30. The threat of heavy rains, forceful winds and potential damage to your home are ever-present. The knowledge of how to protect your home should that damage come, not always so much.
You’ve likely heard the terms, maybe even raised the questions. Storm coverage. Flood insurance. What are they? Do I need them? Do I have them? Doesn’t my homeowner’s insurance cover everything?
“It’s very challenging to impress upon people the differences in insurance policies,” says Brian Bergman, President/CEO Personal & Commercial Insurance with Meyerson-Roth Insurance in Long Beach. “When you get a car, you can say if you have a stereo system or you don’t have a stereo system, two airbags or six airbags—people understand that. But when you explain exactly what the reasons are that you’ll be covered under a policy, people just blank out.”
A one-to-one discussion about the specifics of your home is always essential, of course, but there are some essentials, Bergman offers, that every home owner (or home owner to be) should know for hurricane season and beyond. No blanking out, now…
A Storm Is a Storm Is a Storm
“I think the most important thing about storm coverage that people don’t understand is that a ‘storm’ is not covered,” Bergman says. “There is no coverage for a ‘storm.’ I’ve had people call me and ask, ‘What am I covered for a hurricane?’ And I’ll say, ‘Well, you’re covered whether it’s a hurricane or a thunderstorm or snow or rain.’ The vernacular has to be understood.”
Gone with the Wind
“With storm coverage, especially around here, the biggest thing is wind deductibles,” he adds. “A lot of people do not realize that many policies may have a substantially high wind deductible, so if a tree is blown onto your roof, or if your roof blows off, you’ve got a very high percentage of deductible based off your dwelling coverage.
“Let’s take, for example, a $400,000 house-replacement cost—if you have a 5% wind deductible, you’re looking at a $20,000 deductible just for wind. Any wind. If it’s windy right now and a tree comes down from the wind or the tiles blow off your roof, you have a $20,000 deductible. Many people will call and say, ‘But it was just a small wind, so it’s not that big of a deal.’ And I’ll say no, the deductible is the deductible, whether it’s a small wind or a big wind.“Those are usually [policies with] companies they call ‘unauthorized companies’—which is another thing to know about. There are companies that are approved by New York State and companies that are not approved by New York State, by the Department of Financial Services.
“Basically, it means they don’t have to follow the department’s rules and regulations,” Bergman explains. “It doesn’t mean they don’t, but they don’t have to. And they’re not covered by the New York State insolvency fund. There’s a fund within New York—and many states have this—where, if an insurance company who is approved and follows the rules of New York, or that particular state, if the company goes under, the solvency fund will kick in and will start to pay claims.
“The down side of that is, government intervention is never a perfect system, and it can take many months or many years for claims to be settled. It’s there, but it’s not going to kick in right away. I’ve seen cases where it takes a year-plus to get settled.
“The companies that are approved by New York State, 99% of them don’t have a separate wind deductible, they have a catastrophic hurricane deductible. So if you get a Category Whatever storm coming up the coast or it hits New York, that deductible applies only if it’s a Category 1 or more storm. Sandy, when it hit New York, was not a hurricane, so that’s a saving grace for a lot of people who had those policies, and they had their standard deductible apply.”
It’s Not Just the Water—It’s How It Got In
“There are different types of policies, or there are different nuances and endorsements in the policy, that will allow you to be covered depending on how water gets into your house. There are policies that state you do not have coverage unless the outside of your house is damaged. Then there are policies that go further for a little bit more money, that say if the water gets in, it doesn’t matter if there was damage outside, we’ll cover the water that gets in.
“That’s not something people want to hear when they have a claim, that they don’t have coverage. But I cannot tell you how many policies I come across that people have where it’s a cheaper policy, but it has that exception that says unless there’s damage to the outside of the house, you’re not covered for damage on the inside of the house. They get that specific. It’s something people should know about for general storms, thunderstorms or rainstorms, not just hurricanes.”
That Wind Doesn’t Mean a Windfall
“I think it’s important for people to understand in general that, if you have damage to your roof and there are a few tiles missing, you don’t get a brand-new roof,” Bergman cautions. “A contractor may come in and look at a 30-year-old roof and, if five tiles are missing, they’ll say, ‘Oh, I’ll give you an estimate for $10,000 for a brand-new roof.’ The insurance company is not going to pay for that.
“But that’s the expectation. And I don’t blame the contractor, because what contractor wants to go up and fix a 30-year-old roof? Because if anything happens down the road, they can be held responsible. How do they know if the tile on the far-east side of the roof is going to come off next year? But if it’s a brand-new roof, they can control that. But the insurance company doesn’t care about that.
“Most policies will protect for certain types of damage—like in a wind storm, a tree being knocked down and ripping up a patio, they’ll pay for that. They’ll pay for damage to a patio if it’s vandalized. They’re not going to pay if the ground settles and it cracks or it discolors in the sunlight. Earth movement, wear and tear, deterioration, that’s not going to be covered. They’re not going to pay if your pool leaks, but if an umbrella blows out of the umbrella stand and punctures a pool liner, a policy may cover that. So patios, pools, there is some coverage there, but not a tremendous amount.”
“Flood” Likely Does Not Mean What You Think It Means
“With flood insurance, it’s important to understand the terminology of the word ‘flood,’” Bergman says, “because people will often say, ‘I came home and my basement’s flooded.’ Well, if you put a claim in for your home-owners insurance, they’re not going to cover you, they’ll send out a denial, because they don’t cover ‘flood insurance.’
“The term ‘flood,’ in insurance speak, is the inundation of water on normally dry land from rising water from either an ocean or a bay or an excessive collection of water from, say, rain. It does not cover water that comes up from high tides as far as the ground being soaked. Many people in Long Beach, for example, have basements, and whenever the water table is high they get water in their basement. But that’s not ‘flood insurance’—it has to be normally dry land that collects water. It’s not just because it shows up in your basement.
“Flood insurance has been predominantly covered through the federal government with FEMA and the National Flood Insurance Program [NFIP]. Although in the past 10 or 12 years there’s been a growing private flood insurance market.”
Flood Insurance: House, Yes. Patio, Not. Freezer, Yes. Refrigerator, No.
“Flood insurance will cover structures, your house, ancillary structures like a garage or a pool house. They do not cover patios, they do not cover pools, they will cover air conditioning systems that are attached to the building. They have a bunch of nuances of things that they will and will not cover. It’s funny, they’ll cover a generator that’s sitting in your garage but not the generator you have outside, the permanent generator.
“They do not cover contents in a basement. People have everything and the kitchen sink in the basement—they don’t cover most of that. They’ll cover a washer-dryer, and funny enough, they’ll cover a portable air conditioner. They’ll cover freezers and the food in them—not a refrigerator, just a freezer. They will not cover finished basements, so people who have media rooms, or storage with all the kids’ toys, none of that is covered once you go in a basement.”
“Basement” May Also Not Mean What You Think It Means
“And by the way, a basement is any level that’s below ground,” Bergman continues. “We have some areas in the East End of Long Beach where people’s first floors are actually a few inches below ground, and the technicality is, as long as it’s below ground, it’s a basement. It may be your living area, you don’t think of it as a basement. It’s not your typical seven-steps-down musty old basement, but they don’t care. Whether it’s a foot or 10 feet, it’s a basement.”
Brian Bergman is President / CEO Personal & Commercial Insurance at Meyerson-Roth Insurance in Long Beach. Learn more at yourcoverage.com.