OCEAN COUNTY – The line of people outside Bill Ridgeway’s Barnegat office on October 31, 2012, remains a vivid memory he’ll carry with him forever. Despite the date, those wrapped around the building were not in costume or in search of candy treats.
That particular Halloween came just two days after the wrath of Superstorm Sandy had swept through Ocean County, leaving a trail of devastation in its wake. Regular streets transformed into waterlogged lagoons, while basements and ground floors became unexpected indoor swimming pools.
In his role as a principal at the W.B. Grant Insurance Agency, Ridgeway was acutely aware that the challenges in the coming days were nothing short of monumental.
The State of New Jersey estimated that Superstorm Sandy resulted in $70 billion in damage. While some parts of Ocean County were devastated by high winds, heavy downpours resulted in another type of destruction. Floodwater poured into homes, including those not anywhere near overflowing lagoons, bays, or the ocean.
A number of property owners learned some critical lessons about insurance coverage as a result of Superstorm Sandy. One of the most significant revelations was that standard homeowners’ insurance policies do not extend coverage to encompass flood damage stemming from natural disasters.
Additionally, Sandy underscored the constraints and cost considerations tied to the National Flood Insurance Program (NFIP), originally crafted to offer protection to property owners inhabiting flood-prone regions.
“The program was underfunded for many years with the risks not actuarily sound,” shared Ridgeway. “Congress passed the Biggert-Waters Flood Insurance Reform Act the August before Sandy, and it revamped the whole National Flood Program.”
Ridgeway pointed out that many homes were constructed in areas like Mystic Island and Beach Haven West prior to the mapping of flood zones. The same is true for other areas of Ocean County, where homes were built on slabs, rather than elevated. Insurance from NFIP was reasonable at the time despite the risk.
The Biggert-Waters Act was set to cause change even before the monstrous storm hit Ocean County. One addition was to lower the flood risk in flood-prone zones to higher than the base flood elevation.
Some of the other limitations that came to light during Sandy were that loss of use of a primary home was not compensable, and the program was confined to primary residences.
“When Sandy hit, it was obviously a huge flood event for Ocean County,” Ridgeway said. “Homes that needed reconstruction had to follow the new FEMA rules they were putting together.”
On the flood maps, there are different zones that show how likely an area is to flood. The most at-risk area is called the Special Flood Hazard Area (SFHA). It’s where there’s a chance of a big flood happening in any given year, which is most often referred to as the 100-year flood.
Obtaining flood insurance through the National Flood Insurance Program (NFIP) can be a costly endeavor for homeowners residing in high-risk flood zones. Importantly, whether homeowners opt for private flood insurance or choose the NFIP, those with mortgages and residing in flood-prone regions are obligated to maintain flood insurance coverage.
Ridgeway suggests that homeowners who are not required to purchase flood insurance because they are not in flood prone zones may still want to consider buying the extra coverage.
“Natural disasters won’t be covered under regular homeowners’ insurance,” reminded Ridgeway. “The truth is where it rains, it can flood and put homes at risk.”
Insurance companies and FEMA consider climate change as a factor in making disasters more complicated, severe and frequent. Experts predict that another storm like Sandy is not out of the question.
