Dan's Papers - September 26, 2008

With Hurricane Ike having done about $8 billion of damage recently, one had to wonder about the affect that price tag would have on insurance policies for homes in the Hamptons. Home insurance is affected by distance from the water, with most companies only covering homes 2,500 feet from tidal water like oceans, bays and the great lakes. After Katrina, Allstate quit Suffolk County because of the risk and losses it had during that disaster. However, just a few months ago, new rates and conventional policies became available for homes just 250 feet from tidal water.

Flood insurance is valuable and needed coverage in Suffolk County. Here, flood insurance is guaranteed up to $250,000 and written by FEMA (Federal Emergency Management Agency). However FEMA has three categories for homes. The least expensive and desirable rating is called "X" FLOOD; its premium is around $388 for the $250,000 of flood insurance. The next category is "A" FLOOD, defined by hazard elevation and proximity to designated flood areas. The least desirable category is "V" FLOOD, which is for actual negative elevation (like New Orleans); that same $250,000 of coverage can cost thousands of dollars. There are umbrella policies available with $250,000 deductibles, meaning you need a FEMA policy for the first $250,000.

Just this month, FEMA rewrote the flood maps for the east end of Long Island, with homes in the Village of East Hampton and Sagaponack being adversely affected. With the new mapping raising flood levels from a peak of 13 to 17 feet in those areas, the effects have yet to be calculated. Local firms had no "official" comment on the recent actions. In a survey, it was noted that Chubb, Fireman's and AIG Private Client will insure homes close to tidal waters as part of a package deal with other high-end properties to spread the risk. A spokesperson at the Amaden Gay Agencies, an East Hampton firm offering insurance since 1890, said that, as of now, there are no changes in rates due to Hurricane Ike nor the FEMA map changes. But the representative added that it could change, so homeowners should call their agents and review their coverage. Barbara Lynch of FEMA released data based on the new mapping that shows, on the whole, that the number of homes in the distressed flood zone in the Town of East Hampton dropped from 1,632 to 1,512. The total number of homes in the flood zone in the Town of Southampton was reduced from 3,579 to 3,104. However in the Village of East Hampton the number of homes affected by the new mapping is 86, with the home tally being raised from 60 to 146. There is the same adverse affect in Sagaponack with a gain of 73 homes (from 46 to 119). Needless to say everyone who lives in any of those homes will face an increase in their flood insurance. With home taxes going up, the idea of insurance increases is not happy making. The new detailed maps have only been sent to the towns in the last week. Lynn Ryan, an aide to East Hampton Supervisor Ed McGintee, said, "FEMA will be holding public hearings about their findings at town hall in October." She said it had been 20 years since the last FEMA mapping. On the up side, the new FEMA findings should, in many cases, have a favorable effect on home building requirements, since fewer properties in the towns will require building to the stringent flood zone codes.