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Rising Costs Have Sandy Victims Contemplating Walking Away

Homeowners are faced with a choice of elevating a home at a high cost or paying thousands more for flood insurance.

OCEAN CITY, NJ -- Elevate, pay thousands more in flood insurance premiums or simply walk away from homes? That is the question on the minds of some Hurricane Sandy victims.

The first floor of Craig Verran’s Manasquan home was totaled. A home that never took on water in its nine years is now being refurbished prior to Verran making his decision.

“It’s a tough decision,” Verran said. “You either elevate or else. It’s an 'or else' situation. You’re going to face premiums that are unbearable.”

Property owners in Ocean City and across the Jersey Shore are facing the same decision.

In addition to $150,000 toward the damage to his home and car, Verran will be facing at least $75,000 to elevate his home or a $7,500 increase in his insurance, he said.

Before Sandy, Verran’s home was 1 foot above the required elevation and not in a flood zone. Now, with FEMA’s new Advisory Base Flood Elevation maps, Verran is located in a flood zone and 2 feet below the recommended elevation levels. 

‘Waiting for a better scenario’

The  and recommend that residents in flood zones raise their homes on average between 1 and 5 feet. Based on a scientific analysis of recent and past storms, the flood maps estimate the kind of flooding various zones can expect during a once-a-century storm, such as Hurricane Sandy.

While homes deemed more than 50 percent damaged are required to elevate, homeowners below that threshold are not, but they’ll face the increased cost of flood insurance premiums.

When the state adopted the FEMA maps in January, Christie explained the kind of flood insurance premium increases property owners could anticipate if they don't build to, or above, the new flood maps. 

If a property in an A Zone, which is described as a high-hazard zone, is 4 feet below the flood maps, the owner can expect to pay up to $31,000 in insurance a year. If the property is built or elevated to the new standard, that total drops to $7,000. Another 2 feet above the recommended height and that total is cut in half. 

“This is the beginning of potentially very bad things to come,” Verran said, anticipating foreclosures and bankruptcy, not to mention an impact on municipal tax revenues. “(Sandy victims) think they’re stressed now, there’s many more years of stress to come.”

Spending more than $75,000 to raise his home would be better than an $8,000 annual insurance premium in the long run, Verran said. Either way, Verran would be putting a heap of money toward a home with declining value.

“I’m waiting and seeing. I’m not really doing what Christie has advised because I don’t even think the governor understands,” he said, adding that the concept of elevating or pay high insurance costs seems unrealistic. “In my mind, it’s so unrealistic that I’m just going to wait. I’m waiting for a better scenario.” 

Allstate and National Flood Insurance Plan representatives told Verran that he has four years to make a decision, before the increases go into effect. Until then, with hopes changes might be made, he’s making his home livable.

“I think there’s been a total overreaction to a very bad storm. The reason I’m so upset is because of the magnitude of what they’re scaring us with,” he said.

Verran, a senior citizen on a fixed income, cannot afford either.

“I couldn’t walk away because I still have an asset here that’s worth something in my pocket after I pay my mortgage, but it’s not a lot,” he said. “Those under water in mortgage, they might just walk away.”

Like Candice, an Ortley Beach resident who declined to offer her last name. Her home has been in her family for 16 years and is located on the center of the island.

Walking away

Even though it’s her family’s primary home, the property is still in her parents’ name, making it a “secondary” home and disqualifying her for Increased Cost of Compliance funding from FEMA.

“Originally the insurance adjuster came out and told us all that needed to be replaced was 4 feet of drywall and carpeting,” Candice said. “Unfortunately, because of Toms River’s slow response, the damage increased as time went on so all of the floors, walls, and ceilings had to be torn out as well, which we did on our own. “

Once Candice heard about elevation requirements and insurance premium increases, she halted the work on her home.

Her options? The home was built in the 1960s, and Candice has been told it cannot be elevated. Candice would have to demolish and rebuild or repair and encounter the insurance rates. Additionally, most repairs aren’t covered by insurance since damage was caused by “insufficient time to get in and make repairs” rather than the initial flooding, she said.

“Help available is very minimal, which leaves my family with little option but to try to sell being there is no other option we can afford.

“Cost of living may go up but income doesn't, so if we can pay the mortgage off and keep enough for a down payment on a new home we'd be satisfied,” she said. “Who knows how long it will be before Toms River, New Jersey, and the federal government will have any answers and we simply can't wait that long and are trying to avoid foreclosure.“ 

No concrete answers

George Kasimos of Stop FEMA Now recently met with Toms River Mayor Thomas Kelaher, FEMA representatives and Christie’s policy advisers.

“Basically, we don’t have the information to make an educated decision in terms of whether we should rebuild, raise or simply walk away from our homes,” he said.

Currently, there aren’t any programs to assist secondary homeowners, he said. Hazard Mitigation funding is six months to one year away. Community Development Block Grants through the U.S. Department of Housing and Urban Development will be made available in the future but Kasimos worries it will be first come, first serve at the expense of those who need help most.

“How do we rebuild if we don’t get the money to rebuild?” he said.

Homeowners also don’t know if the flood map zones are going to be reduced, he said.

“We’re six months after Sandy, and we’re still waiting for these maps. We can’t wait eight years,” he said, referring to New Orleans, which recently received its maps.

FEMA assured it would not take eight years to finalize the maps. New Jersey was further along in the process than New Orleans when Katrina struck, FEMA Hazard Mitigation Branch Director Bill McDonald said. New Jersey was already going through a map revision two years prior to Sandy while revisions for New Orleans weren’t even in development yet.

The maps are “conservative,” and zones may shrink, he said, although he could not say by how much.

“We’ve attested the fact it's based on the best available data we have,” he said. “We would rather be conservative and have people build safer and more resilient…It’s a choice they need to make. We’re just trying to provide them with all the information available.”

Kasimos, a primary homeowner in Toms River, is rebuilding but not yet elevating because FEMA is not going to pay for his family to live elsewhere until the maps are official, he said.

He was going to reconstruct his home in December when a neighbor told him about the FEMA maps and insurance premiums.

“We stopped reconstruction,” he said, adding that he found out his flood insurance will go from $1,000 to $15,000 annually. “Can we even afford the home?

“There’s so much misinformation out there. Nobody has concrete answers,” Kasimos said of why Stop FEMA Now convened. “Everybody thinks this is a Sandy rebuilding issue. Millions of people have been flooded in the past. The issue is rebuilding to the new maps.”

Mary Ryan, president of the Manasquan Beach Improvement Association, has a membership of 300 households. She too sees the maps as the issue.

“They are creating such an issue for people,” she said. “It does seem to be an extreme reaction to what happened with superstorm Sandy. We’re really talking about a lot of height.”

Funding that’s “supposedly” available is not easily accessible, she said. Many of the association’s members are still displaced, held up by insurance carriers and without contractors to do the work.

While she hasn’t spoken to all 300 households, many people are unsure of how to proceed, she said.

“There are so many different factors playing into decisions that people are making. It has really created a very difficult situation for people,” she said. “People have said they don’t know if we’re going to be able to stay here.”

‘Scraping up all resources’

McDonald recommends homeowners contact their local officials before making a “hasty” decision. Hazard Mitigation will only be available to towns that applied, even then, the state will prioritize which projects to pursue.

“There are other opportunities and that’s why they need to contact their local officials,” he said.

The Housing Resettlement Program through CDBG is aimed at homeowners who are considering selling or abandoning their property. Funded at $200 million, the program will provide $10,000 grants to eligible homeowners to remain part of their communities. But 60 percent of the funds will be reserved for low-to-moderate-income households. More information on CDBG funding can be found here.

But Toms River Mayor Thomas Kelaher is still “afraid” of losing residents, he said.

“There’s been some cases of people saying we’re out of here,” he said, adding that close to 10,000 homes have suffered significant damage. “If only 100 have that problem, that’s 100 I don’t want to see go.

“We’re scraping up all resources. Our mission is to do everything we can to get as many people we can back into their homes as fast as we can,” Kelaher said.

No negotiating

Marshall McKnight, spokesman for the state Department of Banking and Insurance, does not anticipate a high number of foreclosures and bankruptcies due to the cost of homeowner’s insurance. His department reviews homeowner’s insurance premiums and has a mediation program to help consumers who have unresolved issues with their carriers.

He has seen some increases in homeowner’s insurance but said it’s still too early to tell how Sandy will impact the market. Homeowners are still able to obtain insurance, as the FAIR Plan, which is an insurer of last resort, is at an all-time low, he said.

“We continue to monitor the FAIR Plan since that would be the first indication of policies leaving the voluntary market,” he said.

McKnight recommends those who can’t afford or get coverage to call 1-800-446-7467. But the issue of affordability mainly lies with the National Flood Insurance Program, he said.

FEMA does collaborate with the state and insurance industry but has no control over the cost and rates of insurance, he said.

“I don’t know of any way there is going to be a negotiation,” he said, adding that FEMA has to comply with the flood insurance reformat of 2012.

The National Flood Insurance Program is administered by FEMA. The federal program enables property owners in participating communities to purchase insurance to protect from flood losses. In exchange, participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.

FEMA works closely with nearly 87 private insurance companies who participate in the Write Your Own Program, McDonald said. Those companies’ write and service flood insurance in their own names while operating within the context of NFIP.

Provisions to legislation will require the NFIP to raise rates to reflect the true flood risk and change how Flood Insurance Rate Map (FIRM) updates impact policyholders.

Among other factors, structural characteristics such as the type of building and flood mitigation techniques are considered during the rating of every flood insurance policy, McDonald said.

The elevations prior to FEMA’s revision did not depict the true risk, he said.

“I emphasize that we just provide the information,” he said. “The state adopted it under their emergency act. It’s something they found and agreed that it’s important if you’re rebuilding, to rebuild higher, safer, stronger and more resilient.”

McDonald could not say whether the new “true risk” would cause an influx of foreclosures and bankruptcy.

“All of this looking forward is the flood insurance issue…The people who still have mortgages have that issue to contend with,” Ryan said. “Gov. Christie keeps saying elevate, elevate, elevate. People are getting to the point where they’re too tired to be scared anymore.”

A representative from Christie’s office did not return calls for comment.

Nick April 27, 2013 at 05:04 PM
Sandy homeowners are dealing with what Fla and gulf coast owners have dealt with for the last 15 years. In some cases we were asked to elevate 14 feet and even with that the ins rate went up 10 times, if you could even get ins. Most of us on the water front are in state run high risk pools for wind and hale at 10 K a year for only that coverage. Then you add flood and standard policy. Good luck with a bad situation.
Pogo April 27, 2013 at 05:25 PM
I have an unobstructed view of the now famous Mantoloking Bridge (to nowhere) from my deck. My flood insurance prior to Sandy was $400 per year since there was no previous history of hurricanes in this area. When I bought my house in 1987 who knew? There may not be another storm like Sandy for 300 years and I think a lot of this house raising and insurance gouging nonsense is pure over reaction. I avoided inside the house flood damage, (only wet insulation in my crawl space), so if they want to jack up my flood insurance, ***** them. My house is paid for. I do wish they would finally settle on the flood maps so people won't be stuck in limbo. There may be problems when it comes to selling my house but I guess I could find a cash buyer or owner finance it. That might be a good source of supplemental income when Social Security tanks.
Me April 27, 2013 at 05:49 PM
Building a home in a flood plain, a hurricane area, a tornado "belt", whatever and NOT expecting to pay HIGH insurance rates is just plain STUPID. Expecting the taxpayers to bail you out when tragedy strikes is just plain GREED.
Sam April 27, 2013 at 06:53 PM
Our taxes subsidize big farming, big oil, big banking and the list goes on and on. Give me my money back for those subsidies and I can afford my new flood insurance premium! FEMA is ruining what Sandy did not! FEMA will ruin the middle-class homwowner and business owner !
Roger April 27, 2013 at 07:37 PM
Having owned a home in the Florida Keys for many years this is no surprise; the real surprise is that they were allowed to build homes that were so vulnerable without already having to pay those insurance rates. Even elevated homes built to withstand 150 mph winds cost a fortune to insure in the Keys; why do people think this should be different in New Jersey or on any coastline vulnerable to such storms?
Paul Schlaflin April 27, 2013 at 09:15 PM
Here is blog written less than a month after Sandy ripped through the Jersey Shore...Your representatives were made aware. Your state and federal representatives just don't give a damn other than the revenue generating boardwalks because they know when you give up the their wealthy friends will cash in and remember them through handsome donations. http://marlboro-coltsneck.patch.com/blog_posts/save-the-homes-of-sandy-victims-now
Malcolm April 27, 2013 at 10:07 PM
We live in central Florida on about the highest elevation in the state. If our house flooded the rest of the state would have disappeared and in 30 years it has never been damaged by a hurricane and we have never had a claim. Yet State Farm keep putting our house insurance up often to pay for damage in other states. It seems that it is a licence to print money for the insurance companies and increase their contributions to state legistrators to back demands for further increases.
LeeAnn April 27, 2013 at 10:44 PM
If you want an insight as to how the GREEDY INSURANCE COMPANIES make out, then just check out the rates for Insuarance in Florida. Now they have a new thing, if you live up to 10 miles inland, you are considered in a flood zone. Well considering that NO Florida City is further away than either coast of more than 55 miles......just think of how many people are now being forced to buy flood insurance making the FAT GREEDY INSURANCE COMPANIES FATTER. The INSURANCE COMPANIES are by far the biggest lobbiest in Washington and everytime something might make them spend 10 cents, they immediately mobilize to beg for more rate increases. Flood insurance down here went from a few hundred bucks a year to THOUSANDS. Sad to say most can NOT afford to get it so we will be at FEMA's mercy should anything happen. Floridians have started saying we will do what they did in New Orleans..........just make the Governmenet bail us all out. People who lived in shacks in New Orleans all of a sudden have homes that neither you or I can afford. I would love to see what those homes will look like in 5-10 years after they occupy them. They did not take care of what they had back then, what makes you think GIVING them all new homes is going to help them???? I truly do sympathize with each and every one of you. I know what the Jersey Shore means to the full time and part time residents and visitors. I myself loved my weekends in Seaside Heights.
Richard Jacoby April 27, 2013 at 11:37 PM
Because Florida is far more likely to get hit by a hurricane and suffer tremendous damage than New Jersey is. Your not serious are you? Florida is in a much higher risk area than New Jersey, much like the Caribbean is a higher risk yet. I had no loss with sandy. Auld my rates go up?
Richard Jacoby April 27, 2013 at 11:40 PM
Malcolm. All flood insurance is handled by FEMA, I believe. Insurance companies handle the policy servicing. . But I hear u.
ED April 28, 2013 at 12:10 AM
Forecasters have been predicting a devastating hurricane hitting the east coast for many years. Just because it never happened before is only a matter of pure luck. There may not be another for 300 years or there may be one nest year.
BLDShamrock April 28, 2013 at 01:39 AM
ME.....what are your thoughts on FEMA "bailing out" so many people who didn't have insurance and then telling those who PAY the insurance that it's too bad "but your damages aren't covered" People who lived in mandatory evacuation areas and chose to stay ended up with help from FEMA, local assistance, the Red Cross and let's not forget they left their vehicles home to float away and got new ones while others prepared the best they could, moved valuables to higher ground and left like they were told to and got NO assistance. Some people work the system while others WORK so that there is a system.
John Lutz April 28, 2013 at 02:12 AM
Cool.....
Sal April 28, 2013 at 04:15 AM
Reality Lesson 101: NO private insurance company offers Flood Insurance. FEMA run by the US Government is the ONLY Flood Insurance coverage anyone can get. It does not matter which insurance company insures your home ___the part that coivers Flood Damages in all FEMA, a US Governmen operation. Wake up and smell the roses ___NO Private Company offers Flood Insurance because the RISKS are TOO HIGH. Hello anyone home ___Insurance Companies have determined THE RISK ARE TOO HIGH. Face Reality, you live in an area where the RISKS are TOO HIGH.
Sal April 28, 2013 at 04:25 AM
Come on people ___THINK. Sandy was NOT a real hurricane and it only had a few 70 to 80MPH wind gusts. Instead it was merely a large storm that arrived during a Full Moon and High Tide cycle. The new FEMA maps are based upon a REAL HURRICANE. One with 120MPH winds and a storm surge of 16 feet. Few if any of the damaged homes would have survived a REAL HURRICANE with 120 MPH winds and 16 foot storm surge. The last major hurricane to hit NJ was in 1960 which is 52 years ago After that one the worst storm was around 1992 in the form of The Storm of the Century (but still not a real hurricane) . But there is NOTHING IN PLACE to prevent another major storm from doing the exact same things to coastal communities again this or next year. And there is absolutely nothing that can be put in place to prevent it from happening again and again. That is Reality, like it or not folks. El;evate, elevate, elevate is the one and the only solution.
Sal April 28, 2013 at 04:32 AM
Hi Nick, Hopefully you already know the the State of Florida insurance pool CANNOT cover the damages costs should a major hurricane mover suoth to North through the state of FL. There is only about 10% or 10 cents on the dollar in the FL State insurance pool. Neither the State Insurance pool nor the state of Florida has the money to pay out in a $100 billion property damage major hurricane.
Ronnie Smith April 28, 2013 at 05:24 AM
Pay off your morgage and you don't have to have any Insurance at all. Screw the Insurance Compaines, chances 9 times out of 10 they will not pay you anything even if you have full coverage . Been there done that . I bought a house in Atlanta that was and still is in a flood zone and have lived in it over 20 years and have had no problems, Insurance Companies want the money , but most of the time will not pay for claims. Life is all about taking a chance, I simply would not pay more that average preimums even if I lived on a freaking Island in the Gulf Coast . True They are over reaction about Sandy and are Greedy Bastards. Not pay it and rebuild your home instead..
Dee Rose April 28, 2013 at 06:51 AM
I live in the middle of Conn. and have paid 1,000 a year. Sandy only took off a few shingles; the other storms we had did more damage. Still I did not make a claim. I talked to my insurance and they said because of Sandy and all the claims coming in, that my insurance will go up quite a bit. I grew up in South Jersey and am used to hurricanes. If I did not pay my premiums (I am elderly and on a fixed income), I certainly do not have the money to rebuild my house (or even fix it). I do not think its fair that those who enjoy the beach life should make the rest of us pay for it with increased premiums. My house is finally paid for,but the taxes up here are out of this world and are going up again this year. We (I and other elderly) live an unsubstainable life-----our income stays the same while the bills for EVERYTHING go up. Fema was not free up here, it was a loan with low interest,so I could not access it for the missing shingles.If you get to live in Paradise (anywhere with shoreline), then you should be prepared to pay for living in Paradise!!! Dee
LeeAnn April 28, 2013 at 10:30 AM
ARTHUR.........Only one problem, FEMA keeos changing the boundary lines for flood areas. What use to be in my area 2 miles, jumped to 5 and now is 10 miles. Another few miles and it will be hitting smack in the center of the State. And why is this being done? Check out all the lobbysist from every insuarance company in the country who hang out in Washington and pile in everytime they go to vote on an insurance item. They squeak, they sqwark, they moan and groan until they get what they want. I really wonder how many pockets the insurance companies have lined and continue to line up in Washington, DC
Mike April 28, 2013 at 12:11 PM
Unfortunately, there can be a heavy price to pay for living close to the water. It's nobody's fault if nature destroys what's been built. It's the chance you take.
Richard Jacoby April 28, 2013 at 12:42 PM
Based on your statement, the risks of flood are too high everywhere. We might live in an area where the risk is too high, but so does everyone else, regardless of their address.
Richard Jacoby April 28, 2013 at 12:59 PM
First off, I made no insurance claim for sandy so I don't think my rate should be raised, but you are correct. I had the unfortunate opportunity to find myself in a real hurricane while on vacation in the Virgin Islands. I can tell you this, ocean city would no longer exist. I mean everything would be gone. I don't care how high you build your new home, it would be destroyed all the same. These new flood maps will do absolutely nothing for a cat 2 or 3 storm hitting OC directly. Unless we ban shingles and start building our homes out of concrete they have no chance of standing up to a real storm. That being said, we still are in a relatively low risk area (for a coastal town) for a direct hit from a major organized hurricane. How many organized real hurricanes make landfall in New Jersey ? Not many, and Sandy was not even a hurricane as its sustained winds had dropped below a cat 1. Florida and the Keys are in an entirely different situation as they are in far warmer water and the trade winds bring huricanes their direction frequently The warmer the water is, the greater the risk for a large storm to hit and sustain its strength while approaching land. I don't think we need to dismantle this town to accomplish smart flood building reform.
Richard Jacoby April 28, 2013 at 01:02 PM
Amen. I have had a couple of claims in my life and had to sue them every time just to get what I was entitled to.
Jeanne Nelli April 28, 2013 at 01:07 PM
we all need to be rich! end of discussion.
Jeanne Nelli April 28, 2013 at 01:13 PM
"once in a hundred years" or once in a century. that does not mean one storm! WHAT IT MEANS, IS ONE YEAR! OF STORMS OR 365 DAYS OUT OF A HUNDRED YEARS!!! this is exactly what has happened in florida!
gozounlimited April 28, 2013 at 03:12 PM
Not when the storm was geoengineered.... HURRICANE SANDY: The HAARP and Aerosol Geoengineered Storm of the Century.... http://www.geoengineeringwatch.org/hurricane-sandy-the-haarp-and-aerosol-geoengineered-storm-of-the-century/
Paul Schlaflin April 28, 2013 at 03:26 PM
You must be joking once means 365..ahahahahaha. Nobody can be that foolish and capable of posting.
Paul Schlaflin April 28, 2013 at 03:29 PM
Gozo is GONZO...how can anyone fall for such nonsense...I'm surprised you're not blaming Bush, but I do see why you post with a phoney name...
Sam April 29, 2013 at 12:49 AM
Agreed Richard Jacoby!!!
Danielle Murphy Coimbra January 21, 2014 at 05:58 PM
FEMA helped out all my neighbors who had no insurance and rented houses. Many have nice new cars now thanks to my Flood Insurance money. And they paid for three years of their FREE flood insurance. My insurance increased by $700. As for my baby and I, we had to move and can't afford to raise the house and add a new septic, but don't worry about us. We just pay for everyone else's shortcomings ended up homeless and relocated on our own.

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