Understanding Flood Insurance: What Are Its Limits? And Can I Get It?

But that hasn't stopped the finger-pointing by some of the homeowners of her 20-unit condominium on Beach 92nd Street, demanding to know why there was no flood insurance. "It's very easy in hindsight to say having it makes a lot of sense," she says bitterly.

And Shore View did have hurricane insurance, ironically enough. "But there's something like a $90,000 deductible and it basically covers wind damage. It's hard to tell what was wind and what was the surge of the ocean."

As Shore View and countless other co-ops and condos keep digging out and trying to rebuild, they will look to their insurance carriers and learn, often to their surprise, what is and isn't covered. Even those that do have flood insurance might find, for instance, that it doesn't cover salaries for the staff, who may have to be paid even though the co-op may be strapped for cash. Why strapped? Because some courts have ruled that co-op maintenance cannot be collected while the building is uninhabitable. (This is open to debate, however, as other courts have ruled that, even when the property is uninhabitable, maintenance must be paid. The statutory definition of uninhabitable includes the absence of a working kitchen or bathroom.)

What You Don't Know Can Hurt You

Many co-op boards "didn't realize" that there was any controversy about whether they could collect maintenance during this time, says James Samson, a partner with the law firm Samson, Fink & Dubow. "They didn't know. It was a real shock. An abatement applies where there is a flood or another casualty that makes the building uninhabitable, yet there are many expenses that continue to accrue that someone has to pay for and insurance doesn't cover. We need interruption of business insurance," he says. "It doesn't exist."

So what does exist? What can you do or buy that can better prepare you for the next "hundred-year flood" — which could arrive next year? And in the meantime, what resources are available right now that can help restore your building — and your lives?

It starts with the National Flood Insurance Program (NFIP), created by Congress in 1968 to offer federally subsidized coverage to homeowners, renters, and business owners through insurance companies — but only if your local community participates in the program. They do that by adopting and enforcing ordinances that match or exceed the flood-risk minimizing requirements of the Federal Emergency Management Agency (FEMA).

Your Next Stop … the Flood Zone

"Most buildings, if they're in a flood zone, have to have flood coverage," says Don Einsidler, president of the property management firm Einsidler Management. "Basic flood coverage is through the federal flood program written by various insurance companies."

In fact, adds FEMA spokesman Ed Conley, "If you live in Zone A, the hundred-year flood plain, then you're required through your mortgage lender to purchase and maintain flood insurance when you have a federally backed loan on your property."

What's Zone A and how do you know if you're in it? Also known as a Special Flood Hazard Area, it's a location with at least a one percent chance of flooding in a given year. You can look up whether you're located in Zone A through FEMA Flood Insurance Rate Maps at FloodSmart.gov, the NFIP website.

A co-op or condo association's NFIP-backed flood insurance covers only the structure itself, including common areas and including damage from a storm surge, according to the Insurance Information Institute. It doesn't cover damage caused by floodwaters to the personal belongings of individual condo or co-op owners. Neither do standard homeowners' policies — although homeowners can purchase what's called an NFIP contents policy.

But let's say your Sandy-battered building has no flood insurance. Where can a condo or co-op board look to find money to help rebuild? Watch for part two later this month or pick up the February issue of Habitat.

For more, see our Site Map or join our Archive >>

Click on image to enlarge.