There were plenty of questions about Hurricane Sandy in the days before it hit the Jersey Shore.
Where would it make landfall? How strong would it be? How much damage would it do?
And while those were answered when the storm slammed the Jersey Shore just a little over a month ago, a new set of questions has emerged for owners of homes damaged by the storm.
Among those homeowners are Dave and Eileen Fabry of Havertown, who have a shore house on the north end of Brigantine. The damage to their house was not catastrophic, but they are going through some of the same hassles that thousands of others along the Jersey Shore are facing.
While Hurricane Sandy left some in the dark and without power for a couple weeks, Eileen Fabry says they have been left in the dark by their insurance company.
“You get no communication,” she said. “We don’t get any updates from the insurance company.”
The Fabrys insurance company inspected their house on Nov. 10, a less than two weeks after Sandy hit on the night of Oct. 29 and morning of Oct. 30. But until late this past week, they hadn’t heard a word from the company since then.
They still don’t know how much their damage appraisal is for, let alone when they will get a check for repairs.
“That was the first time we had any contact from them since they had been out to the house,” Eileen Fabry said. “We are still waiting to hear from them on what they are going to give us. We have no clue. It’s blind faith.”
Complicating the Fabry’s situation is that Dave Fabry works in the Atlantic City area and spends much of his week at the Brigantine house they have owned for nine years. So, part of that faith included them making and paying for repairs so Dave Fabry could stay in the house again.
“With our insurance company, there’s a huge back log in getting settlement checks,” Eileen Fabry said. “Everything we’ve been doing is out of pocket. It’s hard to figure out what it needs.”
The Fabrys house suffered water damage when the three-foot crawl space was filled with water and the first six inches of the house’s main floor flooded.
Eileen Fabry said they had to take up the hardwood floors in the house’s kitchen, among other things.
“He had to clean out the crawl space,” Eileen Fabry said of her husband. “It’s three feet, and that was a mess. Then our outside deck actually floated outside into the middle of the yard. We just had a lot of water.
“Our area got hit harder than other sections of the island did. The water seeped in, and I think it had an easier time seeping in because there was so much of it.”
The Fabrys house sits three blocks off the beach and four blocks away from the bay. So sitting between two major waterways made the Fabrys house a prime target for flooding.
Eileen Fabry said the bottom six inches of drywall had to be replaced in the entire house. So while the house is inhabitable at the moment, there’s still work that needs to be done when the money comes, whenever that might be.
“We haven’t received any insurance part.” she said. “We don’t know how far we can go with the rebuilding.”
Another question is just who to hire when it’s time to do the rebuilding.
“There have been people down there preying on people to get their work done,” Fabry said. “You have to be really careful to get trustworthy contractors. It’s hard to find people you can trust to do the work and show up when you want, and do it at a price that is fair.”
When it comes to prices and fairness, that brings insurance companies to the forefront.
Since Hurricane Sandy’s destruction was so widespread, affecting thousands along the Jersey Shore, the process of actually getting a check for damage will not be a quick one.
“The length of time it takes to complete the claim process depends on several factors,” All State Insurance spokesperson Sheila Breeding said. “Our goal is to settle each claim fairly and quickly, but the volume of claims, the complexity of damages, safety and town access issues will all contribute to the length of time it takes to settle a claim.”
Allstate released a report earlier this week that estimated its total losses from Hurricane claims for October are $1.08 billion, which includes New Jersey, New York and Maryland. Breeding said estimates for total losses in New Jersey for Allstate will be $253 million.
And while insurance companies are sure to take a hurricane-like financial hit because of Sandy, they likely have enough money in reserve to avoid going out of business.
“The overwhelming majority of insurance companies are well capitalized and have reserves to pay claims, even for extraordinary ones for this event,” said Mike Barry, a spokesperson for the Insurance Information Institute. “The insurance industry prides itself on its ability to survive economic downturn.”
But like any industry, if there is a way to save money, the insurance companies will find it. That may result in a gradual non-renewing of policies for shore homeowners. Some companies started doing that as early as last year, but laws only allow them to issue a small percentage of non-renewals per year.
“Katrina (the hurricane that hit the Louisiana gulf coast in 2005) was such a momentous event, that insurers looked to see where else they had significant exposure and issued some non-renewal notices,” Barry said. “I know in New York, you can non-renew four percent of your business. But if you keep doing that, it over time can reduce market exposure. Then they can look at an event like Sandy and say it was a prudent move.”
While the sheer volume of claims will make it hard for insurance companies to move as fast as everyone would like, that is just half of the battle for many shore area residents.
That’s because flood insurance is different than homeowners insurance. Much of the flood insurance burden falls on the National Insurance Flood Program. It’s a federally funded department that is already $18 million in debt from Hurricane Katrina. Once it reaches its debt limit of $20.8 billion, it will have to go back to Congress to get more money, which Barry thinks will happen.
“If you’re a National Insurance Flood Program holder, you’re going to get paid,” Barry said. “The question here is that there is a lame duck congress. They will have to come back to Congress to increase their borrowing authority.”
Barry said he thinks that will be a mere formality as it’s difficult to believe legislators will not want to help areas hit by the hurricane. It’s also likely a formality that insurance companies will increase their premiums, especially for the flood insurance on shore area homes.
That brings up the question of if, or when, another strong hurricane hits the Jersey Shore, what can be done to avoid such catastrophic property damage and loss of life.
New Jersey Gov. Chris Christie estimated the damage to be $36.8 billion earlier this week. Karen Clark and Company, based in Boston, projects property risk based on scientific and engineering data.
Clark started Applied Insurance Research in 1987, which eventually changed the way insurance companies viewed properties in high risk areas.
Global warming has been a common blame for major weather events such as Hurricane Sandy, and while that may well be warranted, Clark points out that it’s not just the severity or amount of storms rising, but the types of structures that are being built in high risk areas that make the storms seem worse.
“While we cannot quantify how much climate change is increasing property losses from tropical storms, studies have shown that well-designed and enforced building codes can reduce damages by over 50 percent,” Clark wrote when interviewed by BU Today, an in-house publication at Boston University.
“There is the related issue of providing insurance at subsidized prices,” Clark said, “that do not reflect the true cost of risk and thereby encouraging people to build in flood zones and other vulnerable areas.”
Clark believes the focus by politicians and individual communities should be different.
“The potential property losses from severe storms have doubled every ten years for the past several decades purely due to demographic factors,” Clark wrote. “This is far more than any increase we’ve seen or probably will see from climate change. So where are the headlines and the politicians proclaiming that recent storms are proof we need to address these issues now?
“You don’t see this because these issues require politicians to make tough decisions that may not be popular at a local level. My main point is it’s much easier to blame it on climate change, which requires collective global action than taking the specific actions that would make a big difference now.”
