Protecting the House

Adrian’s Network member, Rob Intelisano, is an insurance maven. This is Rob’s article and it’s crammed with information that is important to all of us.

There is a saying, “Water is Life!”  We cannot survive without water after a few days.  Look at the situation in Texas right now.  Too much water leads to death and destruction.  Rockaway learned that from Super Storm Sandy and to a lesser extent Hurricane Irene.

On August 29th, 2005, Hurricane Katrina ravaged the gulf coast near New Orleans, in Louisiana, Mississippi, and Alabama.  There were 1836 fatalities as 175 mile per hour winds brought widespread destruction, flooding and left millions homeless.   The damage was estimated at $125 Billion, which has made it the costliest storm in U.S. History!  There were many complaints about how the Federal Emergency Management Agency (FEMA) responded.

Hurricanes Katrina, Harvey and Irma wiped out FEMA’s coffers!  In 2017, Congress bailed out the NFIP (National Flood Insurance Program) with $16 Billion in debt relief!  Scientists say these natural disasters and flooding will get worse because of:

  1. Climate Change
  2. Rising Sea Levels
  3. Rapid Development in Coastal Regions

Part of the current problem is that the premiums are determined by the amount of insurance purchased for the home, instead of the replacement cost. An example best clarifies this.  The owner of a $2.5 million mansion with the same risk as a $250,000 home pays the same premium even though repairing the mansion would cost significantly more.  In other words, expensive homes are paying too little and inexpensive homes are paying too much.  There are also disparities at the edges of the flood map zones. 

According to USA Today, on October 1st, 2021, thousands of homeowners in the riskiest of locations across America will be facing massive rate hikes when The NFIP (National Flood Insurance Program) releases its “Risk Rating 2.0” program!  For the first time, individual premiums will be tied to each property’s actual flood risk.  This will level the playing surface so that properties with the biggest risk will pay the most.

The National Flood Insurance Program, implemented in 1968, provides approximately 95% of the country’s flood insurance, which includes about 5.1 million policies. The old system fails to accurately assess the “true risk” of flooding.  Because of this, NFIP only takes in approximately $4.6 billion in annual revenue.  While this sounds like a huge number, they provide over $1.3 trillion in coverage, which leaves them with excessive exposure.  The new model should rectify some of this.

Currently, the National Flood Insurance Program Policy maxes out payouts at $250,000 (called dwelling coverage) for structural damage regardless of the value of the home.  The limit on contents is $100,000, meaning the maximum you can collect is $350,000 regardless of the replacement value of your house and contents. Nobody knows this better than I since we lost our Belle Harbor beach house due to Super Storm Sandy!  We had a positive claims experience with FEMA by following these 3 crucial claim tips:

My Top 3 Claim Tips Are:

  1. Call FEMA and Ask for a Copy of the Policy: When most people call, they are upset and not thinking clearly.  The insurance companies are sneaky and will start typing up the claim on the spot.
  2. Regurgitate Policy Wording on the Claim Form: This is why it is critical to have a copy of the policy.  By using their coverage language verbatim on the claim form, they cannot reject it!  That was the key for us to maximize our family’s claim!
  3. Be Specific Listing Your Contents: It is not easy to remember each lost item in your home when you are emotionally involved.  We used the website These types of sites give you trigger lists of what are typically in each room, such as your kitchen, living room, dining room etc.

FEMA’s existing flood zones will not be a factor in rates so those homes outside the flood zones could see a rate reduction.  The new policies will calculate premiums based on each home’s replacement value and specific features.  The claim triggers will also include a broader range of flooding events, such as tsunami’s, heavy rainfall, and coastal erosion. 

You may be asking yourself, what does this all mean? 

  1. The most expensive coastal homes will have the largest price increases.
  2. New policy buyers after 10/1/2021 will bear the brunt of the premium increases.
  3. If you are thinking about buying a flood policy, I suggest purchasing BEFORE October 1st to lock in your premium because:
  4. Expected rate increases for existing policyholders after October 1st will gradually increase with an 18% per year cap.
  5. High risk states that will be MOST affected are Florida, South Carolina, and New Jersey.  Broward County, Fla. is the highest flood risk area in the country!

For those of you who want more information or quotes, feel free to reach out to me at  Be Positive, Test Negative and Keep the Faith!