This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Case Closed: Many Sandy Claims Not Eligible For Insurance Payment

Except for a couple of ZIP codes, less than 30 percent of homeowners along the entire New York coast had flood insurance in 2010, according to an issue brief by Resources for the Future, a nonprofit research group based in Washington, D.C.

"Storm after storm over the last several decades has shown that take-up rates for flood insurance are often lower than one would expect, leaving many homeowners without access to capital to rebuild," wrote authors Carolyn Kousky and Erwann Michel-Kerjan.

Not all that surprising

The fact that so many New York Sandy claims have been closed without payment doesn't surprise Amy Bach, executive director of United Policyholders, a consumer advocacy group in San Francisco.

"We expect the number of denied claims to be quite high, solely based on input we're getting and time we've spent on the ground after Sandy," she says.

After Hurricane Katrina devastated the Gulf Coast in 2005, debate roiled about whether a storm surge - meaning rising ocean water driven by wind -- should be considered a flood or a wind event. Standard home insurance policies cover damage from wind, but not floods.

After Katrina, insurers asserted that a storm surge was a flood, and the courts generally sided with the industry.

"Insurers drew that line in the sand, 'This is a flooding event,'" Bach says. "We knew they were going to take a hard line."

The fine print

Another factor that works against homeowners is something called the anti-concurrent causation, or ACC, clause, contained in some home insurance policies.

Basically it says if two causes acting together, such as wind and flood, damage your home, the ACC clause can limit or even eliminate your coverage for all the damage. That's even if one of those perils had been covered if it were the only cause. So, for instance, if storm winds rip up your house and a storm surge causes water damage, you could wind up with no coverage, period, unless you have flood insurance.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.05 -1.20%
FB $117.60 0.14%
GOOG $696.62 0.62%
TSLA $223.50 -3.80%
YHOO $35.97 -0.11%


Chart of I:DJI
DOW 17,654.38 -96.53 -0.54%
S&P 500 2,049.94 -13.43 -0.65%
NASDAQ 4,724.6070 -38.6170 -0.81%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs