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Hurricane insurance enters uncharted waters

By Jay MacDonald ·
Thursday, May 27, 2010
Posted: 11 am ET

Even as we stoke up the barbie for Memorial Day weekend, nervous home insurance companies are chewing their nails in anticipation of the official start to hurricane season. This year, tensions are running higher than normal among homeowners and insurance underwriters, and for good reason.

The eye of Hurricane Katrina makes landfall in the bayou near Buras, La. on Aug. 29, 2005. (Photo courtesy NOAA)

Record water temperatures in the Atlantic combined with the departure of the hurricane-moderating El Nino effect in the Pacific have prompted forecasters to predict an above-average hurricane season this year, with 15 named storms, eight of hurricane strength.

Add in the wild card of the disastrous ongoing BP oil spill in the Gulf of Mexico and this hurricane season may be entering uncharted waters where home insurance coverage is concerned.

According to the Institute for Business and Home Safety, or IBHS, more than half of all Americans live within 50 miles of the coast, and the majority of their properties are exposed to hurricane risk.

How can you keep your family safe and your home intact? Is your home insurance policy handy and up-to-date should you need to evacuate? A few home maintenance projects now can make all the difference should Mother Nature go all Christopher Walken on your block.

The IBHS offers these five S hurricane preparedness tips:

1. Shutter all openings, including windows, doors, garage doors, and even gable ends with materials rated to withstand wind pressure and large projectiles. Oh, and that old trick of taping an X over windows? Not worth the effort.

2. Secure loose roof shingles and tiles, especially at the roof edges, to keep them from peeling off in a domino effect. Three one-inch dabs of roofing cement under loose shingles should suffice.

3. Seal openings, cracks and holes against horizontal spray, especially areas where wires, cables and pipes enter the house.

4. Strengthen soffits with sharp stainless steel screws and polyurethane caulk to keep water out of your home.

5. Survey the surroundings, replace gravel landscaping with shredded bark, limit yard objects and trim trees and shrubs to minimize sources of wind-borne debris.

What's your best home hurricane tip? And are you gonna eat that last shrimp?

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Jay MacDonald
June 02, 2010 at 2:38 pm

Hi, Barbara -- As you've already determined, the mortgage lenders do have the option to require you to purchase a certain amount of flood insurance coverage. Based on what you've said, it sounds like you're grappling with one or more of these issues: your refi triggered the higher flood premium, your lender's flood underwriting criteria changed, and/or your flood zone designation may have changed (there's a lot of that going on post-Katrina). You might want to check on your zone designation; in some cases when properties are rezoned on the flood maps, homeowners have successfully petitioned to "grandfather in" their old zone designation. It's also possible that there was a mistake made in the refi process. To shop for another mortgage lender, you might start with the State of New Jersey Department of Banking and Insurance at Good luck!

Barbara Ferriol
May 31, 2010 at 11:28 am

I would like some information on flood insurance if anyone has any information.

I live in New Jersey and I refinanced 2 years ago. I used to pay flood ins. on the mortgage amount, but the bank informed me that I had to pay on the max amount that the flood insurance companies allow which is $250,000. My payment went from $800 a year to $1850 with a $10,000 deductible. I contacted FEMA and was told that I have to pay whatever the bank says but the bank has the option to decide if they want the premium on my mortgage amount or the $250,000. I am in a 100 year flood zone but fortunately I do not get water but here is my problem.

In order for the flood insurance companies to pay a dime, my house's has to have structural damage. Basically, the foundation has to collapse and float away. This insurance does not cover anything else but structural.

I cannot afford the flood insurance nor can I sell (who would want to buy). When I bought this house 25 years ago, I was not told I was in a flood area so now I am stuck.

Does anyone know if in fact the banks have the option to choose what I pay for flood insurance? If so, does anyone know of a bank in Jersey that would only charge me for my mortgage amount ONLY?

I could sure use some help with the problem. I have been researching this for over a year.

Thank You