Eighty-six-year-old Ellin Ward was stunned when she returned to her home in Normandy Beach one month after evacuating for Hurricane Sandy. Two houses that once stood across the street had been knocked off their foundations during the storm and crashed into Ward’s home on 4th Avenue, breaking it into three sections.
That was just the first shock. After sending an adjuster to look at the two-story, 2,600-square-foot home that Ward and her husband purchased in 1963, her insurance company offered a settlement of $4,100 to replace pieces of the roof that had blown off. The rest of the damage, they said, was the result of flooding—and Ward wasn’t covered for flood damage.
“A third of the roof is missing,” says Ward’s son, Jack, who is handling the rebuilding process for his mother. “That money doesn’t even purchase materials.”
Jack Ward contacted the insurer, Farmers Insurance Company of Flemington, contending that wind was a major factor in the collision of the houses. Farmers sent a forensic engineer to look into his claim. Ward then hired a forensic engineer of his own, who told him the damage to the home was the worst he had ever seen—including homes wrecked in New Orleans by Hurricane Katrina. But one month after Farmers sent its forensic engineer, the company confirmed that $4,100 remained its final offer.
Ward secured a one-time maximum payment from FEMA of $31,700 to rent an apartment for his mother—a widow since 1993—and to replace belongings destroyed in the storm. The house itself, he came to realize, will have to be torn down and rebuilt from scratch. He has applied for a low-interest loan from the Small Business Administration to help defray the cost of reconstruction, which he expects to exceed $300,000.
“My mom would really, really like to get back,” Ward says. Still, it remains uncertain whether that will be possible.
In Sandy’s wake, cries of “We will rebuild” resounded across New Jersey, a testament to the grit and resolve of residents and officials. But now, many of those affected are asking, “How will we rebuild?” Like the Wards, large numbers of Shore residents and business owners find themselves living through an insurance nightmare. Adjusters are hard to reach and in short supply. Coverage often isn’t what policyholders expected. Payouts are slow to arrive. For some, payouts are nonexistent—especially if they didn’t have flood insurance. (Property owners in high-risk flood areas are required to buy flood insurance if they carry a mortgage, but many longtime Shore dwellers have either paid off their mortgages or inherited their homes, mortgage free.)
What’s more, insurance policies are bewildering, and help deciphering the fine print is hard to come by. As of mid January, the state’s Department of Banking and Insurance had received almost 3,500 formal requests for assistance and inquiries, a state record for a single storm. “At the top of the list of concerns are delays, followed by denials and unsatisfactory settlements,” says Marshall McKnight, a department spokesman.
New Jersey homeowners have already started filing lawsuits against insurers, says Christopher Placitella, a trial lawyer in Red Bank who is handling a number of Sandy-related cases. Most of the complaints, he says, relate to insurers’ decisions whether to consider a claim as flood damage or wind damage. In some instances, policyholders allege that their agent did not advise them that flood insurance was available.
There may be more help down the road for some homeowners. The $50.5 billion federal Sandy relief bill includes $16 billion in Housing and Urban Development Department community block grants, some of which are intended to go toward individual repair costs not covered by homeowner’s insurance, FEMA grants or Small Business Administration loans. But the block grants are also meant to help fund repairs on public infrastructure, so it’s unclear at this time how much will actually end up in the pockets of home- and small-business owners. (An initial $9.7 billion in aid went toward replenishing the depleted coffers of the National Flood Insurance Program.)
Sadly, even with a check in hand, Sandy-stricken homeowners still have a gauntlet to run. Residents with the wherewithal to rebuild, including year-round Shore dwellers, are having a hard time finding contractors to do the work. Quotes tend to be high and even after a contract is signed, months may elapse before construction begins.
Holli Willis has been looking for a contractor to rebuild the house she owns in Point Pleasant that is the primary residence of her daughter, Ashley. Willis didn’t have flood insurance, but she did get a check from FEMA toward repairs. Spending it has been a challenge.
“We gutted the whole house and we can’t seem to get anyone to put it back together,” she says. Three different contractors promised to get back to her but never did. In addition, guided by new preliminary flood plain maps issued by FEMA in December, she’s decided to raise the house between 11 and 15 feet. (Final maps should be released later this year.) She’s been told it should not cost more than $20,000 to $25,000 to elevate her small house. But not all construction firms are equipped to do that kind of work; Willis anticipates that the wait might be as long as a year. Fortunately, houses—even fully furnished ones—can be raised after renovations have been completed.
Willis hopes costs aren’t elevated as well. When she finally got an estimate, new sheet rock and insulation alone for the 950-square-foot, one-story house came in at $28,000. “The itemized bill listed $1,500 for nails,” she marvels.
Serena and Anthony Salvatoriello, both in their 70s, have lived 24 years in their house in Surf City, on Long Beach Island. During the storm, six inches of water pushed in their front door and inundated the floors, lower walls, appliances, heating and electrical systems and virtually all their furniture. They thought their flood insurance, administered by American Bankers Insurance Company of Florida, would cover the damage. But the payout came to only $10,000 to replace the house’s contents and $86,000 for reconstruction.
“That isn’t enough to [repair] the house,” says Serena Salvatoriello—especially given the adjuster’s recommendation that virtually everything in the house be replaced, from the flooring to the sheet rock. She also discovered that the insurance check was made out to two parties, the Salvatoriellos and the bank that held her mortgage—standard procedure when there’s a mortgage on a home. But that allowed the bank to hold the check in escrow and deliver the money in increments after the Salvatoriellos showed signed invoices proving the work had been done. The process seemed so daunting that they decided to pay off their mortgage in full to get access to their settlement.
In late January, Serena Salvatoriello met with a representative from FEMA, who suggested that she might be eligible for additional reimbursement. But she’s still unsure whether she and her husband will have enough money to fully repair the house, or be forced to sell. “I don’t want to leave—we love it here,” she says. “But if we have to tear down the house and sell just the lot, I’d rather do it sooner than later.”
Confused about her options, she has been gleaning whatever input she can from friends, neighbors and a Sandy information fair at a local church.
The Salvatoriellos are not alone in their uncertainty. Insurance procedures differ from one company to the next and policies aren’t written in consumer-friendly language. Homeowners like Santoriello “need guidance, maybe from an attorney or a public adjuster,” says Jonathan Wilkofsky, executive director of the New Jersey Public Adjusters Association. Public adjusters help policy holders interpret their coverage and are paid a percentage of the amount recovered, typically between 7 and 10 percent. (Wilkofsky warns not to retain any public adjuster charging more than 12.5 percent.) Guidance from an attorney can be even more expensive, especially if it results in a lawsuit.
Lauren Payne, New Jersey Monthly’s home and garden editor, retained a public adjuster after she realized that the compensation she received from her flood policy would cover only about half the cost of restoring her year-round home in Bay Head. Sandy’s flood surge destroyed most of the contents of the house and compromised its foundation. Payne—who documented her travails in the February issue of New Jersey Monthly—had maximum flood coverage on the house itself. What she did not have—and did not realize she needed—was flood coverage on the contents, defined as anything she could take with her in a move, like furniture and appliances.
On top of that, her insurance company, Allstate, informed her that damage to shingles on the back of her house, caused by a fallen tree, was considered flood related, because flooding had loosened the tree’s root system. In a wind and flood event, Allstate’s adjuster told Payne, “flood always trumps wind”—and you can’t be reimbursed for both. Eventually, Allstate did pay about $1,000 toward repair of the shingles and a section of Payne’s deck—but nothing for a damaged shed and fence, which the adjuster told her were not part of her dwelling.
That’s when Payne turned to a public adjuster. “I was faced with looking through this 30-page insurance document and trying to figure out what they missed,” she says. The public adjuster brought in a structural engineer who spotted additional damage to the house above the flood line—damage that could be attributed only to Sandy’s ferocious winds. Armed with this new information, Payne has filed a supplemental claim.
“The learning curve,” she says, “is extremely steep.”
Rising insurance rates are another hurdle for Shore homeowners and businesses. Over the next three to four years, flood insurance rates will go up for many homeowners across the country, thanks to legislation enacted months before Sandy. (Though flood insurance is managed by private insurance companies, it is subsidized by the federal government.) According to FEMA, rates may also rise for policyholders in any neighborhood reclassified as high-risk based on new floodplain maps or if their homes suffer “substantial” storm damage or require “improvement” after a storm. Additionally, many homeowners who didn’t have flood insurance in the past but received aid from FEMA will now be required to carry it, thanks to agency regulations—even if they own their homes outright.
Basic homeowner’s insurance rates may rise as well, with some insurers likely to drop coverage of regions they deem too risky. Immediately after the storm, Donna Thompson called her insurance company, Philadelphia Contributionship, only to discover that her lack of flood insurance meant that repairs on her water-damaged house in Bayville wouldn’t be covered. A week later she got a letter from the company canceling her policy. It was later reinstated.
“I called my agent, and she said it had nothing to do with the floods,” Thompson says. “Two years ago the company decided there was too much risk in being on the water and they were dropping customers over a five-year period. This was just my year.” Philadelphia Contributionship did not respond to calls for comment.
The picture is no better for business owners like well-known Shore restaurateur Marilyn Schlossbach and her husband, Scott Szegeski. Sandy swamped three of their restaurants—Langosta Lounge and Pop’s Garage on the boardwalk in Asbury Park and Labrador Lounge in Normandy Beach.
Schlossbach thought she was prepared for such an event. After Hurricane Irene closed down those same restaurants (plus Dauphin Grille in Asbury Park) for four days in 2011, she switched coverage to restaurant specialist RCA Insurance Group and kicked in another $20,000 in premiums annually—bringing the total bill to about $50,000. The additional cost was intended to cover her and her key employees for lost wages if a catastrophe disrupted business.
Schlossbach says RCA did not send an adjuster until three months after the storm; at deadline she still had not heard back about his findings. Schlossbach and her employees had not collected a penny in income replacement, and she had no idea what, if anything, insurance would ultimately cover. “Nobody has talked with me,” she says.
Thomas Hartmann, vice president of underwriting at RCA, says the company acknowledged Schlossbach’s claims as soon as she filed them in December and that they hired an outside adjuster to handle her case. Hartmann blames the delay in settling the claim, at least in part, on an overwhelming case load and says, “we’re paying claims on a daily basis.”
RCA did contact Schlossbach, she says, to let her know it would not renew her policy when it expires in the spring. “They said they might reinstate us after the case is settled, but then they could raise our rate,” she says. “It’s like dealing with the mob.” Hartmann would not comment on “reinsurance” issues.
Schlossbach has opened an account at the website GoFundMe.com, where customers and supporters can contribute to the costs of reconstruction. “It’s not enough to keep us up and running,” she says of the roughly $11,000 she had collected at press time, “but it’s a psychological boost.”
In the flood of confusion and anxiety that has washed over the Shore, even the smallest boost might make the difference between being able to hang on and having to leave behind the memories and dreams of a lifetime.
Leslie Garisto Pfaff is a frequent contributor.