Flood Plain Facts: How Federal Flood Insurance Can Save Your Co-op / Condo

Most buildings, if they're in a flood zone, are required to have coverage, says a spokesperson for the Federal Emergency Management Agency (FEMA), which is responsible for government-backed disaster relief. For instance, if you live in Zone A in New York City — the so-called "hundred-year floodplain" — and your property has a federally backed loan, you're required to purchase and maintain flood insurance.

Because ordinary homeowner policies don't cover storm-related water damage, the United States Congress in 1968 created the National Flood Insurance Program (NFIP), administered by FEMA. This provides flood insurance to property owners, and, in return, local governments commit to floodplain management and flood mitigation. Property owners can obtain the insurance directly from the federal government or through an affiliated insurance company (called an NFIP Direct Servicing Agent). Because it's from the federal government, policy coverages and premiums are the same all over the country.

Contents Under Pressure

This flood insurance covers only the structure itself, including common areas; it doesn't pay for floodwater damage to individual condo or co-op owners' personal belongings. However, individual condo or co-op owners can purchase a contents policy from the NFIP.

Now comes the issue of getting the insurance company to cough up. The quick answer: hire your own insurance adjuster. 

After superstorm Sandy struck, the Alhambra Condominium, in Oceanside, Long Island, had a foot of water in every unit. "We hired our own adjuster to fight the insurance company," says the condo's manager, John Wolff, president of Alexander Wolff & Company. Called "public adjusters," these professionals work for a percentage of the insurance payout. Most charge about 10 percent, although property managers are sometimes successful in getting the adjusters down to 7 or 8 percent.

In the end, you want to have as much control as possible. "There's always an adjuster appointed by an insurance company, but you can hire your own public insurance adjuster who can negotiate more for a settlement," Wolff explains, adding, "There's always an adjuster appointed by an insurance company, but you can hire your own public insurance adjuster who can negotiate more for a settlement."

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Adapted from "Before the Next Storm" by Frank Lovece (Habitat, June 2014)