Sandy Homeowners’ Flood Insurance Issues Still Remain Unanswered

Legislation of Menendez to reform the Federal Program will be put to vote this week.

Superstorm Sandy victims say that the NFP still has major reforms ahead.
When Superstorm Sandy arrived in the Ocean County community of Forked River near Denise Vaccaro’s bayfront home in October 2012, it was only the beginning of her problems. The loss was so severe that her home was destroyed, but she was only given a $29,000 repair by her flood insurance company.

Seven years since Superstorm Sandy, Vaccaro, and other house owners have been troubled that the basic problems–which became evident in the aftermath of the hurricane–have not been addressed in the nation’s flood plan.

Vaccaro remembers the estimation of her adjuster. She said, “I knew everything since I was in the contracting sector. I immediately knew that the amount was fake. Then I took it to friends, who said, “Money isn’t enough for labor and material. Everything in your home is completely destroyed and you should get it fully repaired. It must be done correctly!”

Vaccaro faced lots of difficulties to obtain payments for her losses. The same was the case with thousands of the victims of New Jersey storms after Superstorm Sandy. The insurance company also tampered with construction records to minimize or deny payments. The concerns led to several trials, too.

In March 2016, the Office of the Inspector General, of the Department of Homeland Security, reported on the fact that in the FEMA (Federal Agency for Emergency Management) private insurance companies issuing national flood insurance policies had not provided adequate oversight and therefore could not identify systemic problems in the running of the program.

They still need major reforms

In the midst of all the criticisms, Sandy’s survivors unhappy with their settlements were allowed to reopen insurance claims. The agency has also made some administrative changes behind the scenes to “enhance customer experience,” but years later, none have been codified into law and storm-victim advocates are rattling a list of reforms they say are necessary to prevent similar problems in the future. The Commission demands that flood insurance complaints be treated more fairly and transparently, removing some of the bureaucratic barriers that made rebuilding expensive and lower premiums to lessen the financial burden on homeowners in the future. To correct many of these issues, Sen. Robert Menéndez (D-NJ) has introduced legislation. He expects the Senate to reauthorize and extend the NFIP to legislation, which must be voted on this week. Nevertheless, while the bill from Menendez won support, it is a difficult task.

Amanda Devecka-Rinear is heading the New Jersey Organization Committee, a community advocacy organization that is campaigning on behalf of the people of South Jersey.
“We need a flood insurance policy that doesn’t have any loopholes to cheat people, and when residents are struggling, you don’t have an unlimited account to pay their legal fees,” she said. “The same thing will happen, ” she said if another big storm struck the Jersey Shore tomorrow. “They’re nuts!”


David Charles is the president of Master Claims Consultants. He had a front-row seat to everything that went wrong as a public adjuster for 40 years, focusing on disaster relief, including five years in New Jersey following the Superstorm Sandy.

“The big problem I really encountered with all the hurricanes I’ve operated on was how they used exemption from the earth’s motion,” he added, responding to insurance companies that issued infrastructure documents that there was pre-existing damages to the base of the homes or was triggered by natural land movement instead of raging floods.

“We have a few terms in this policy that are more equipped for earthquakes and sinkholes. The language was vague, and they exploited the lapse We have rejected thousands of allegations. They gave $50,000 for $250,000 damages, that people just had to go out of their houses.

“Appeals were a scam. They’d say you could have an appeal, but no one ever claimed. It’s only been a joke!”Amy Bach always recognized the power of the imbalance. She is president of the global consumer advocacy group, United Policyholders.

“Sandy showed that how the NFIP is operated is a major benefit to insurers and a second-class role for policyholders,” she notes.

Bach remains upset because the issue that she considers as the root of the whole Sandy flood insurance debacle –all these years later–has still not been addressed.

Forced to underpay?

She explained that although the government generally gives insurance companies the funds for flood claim settlements, the government requires them to pay the bill out of their own pockets, for any payments to the owners who are later determined to be more than what was required. “Adjusters were fined for overpayment, but they were not penalized for underpayment,” she said. “The compensation structure has nearly been designed to make lowballing easier.

Bach states that she has not been aware of any major flood insurance cases in the years that have taken place after Sandy and her company are not aware of common concerns from policyholders. What we haven’t seen was a clear penalty that would discourage an Adjuster from underestimating claims.

She recognizes that many of the flood-related people who had no flood insurance at first because they could not afford it or thought they did not or weren’t able to buy it stayed with a significant number of recent major hurricanes such as Maria and Harvey. In some instances, residents had no mortgage coverage because they had no loans or resided in places known to be at risk of flooding.

Bach also states the NFIP must be checked in full. However, she is also comfortable with what she sees as a change of culture in FEMA.

“I have to accept that new program leadership increased customer satisfaction,” she added. Insurance coverage issues aside, she states, “the company had to pay quite a bit of legal costs for resolving the cases,” and she added: “and I would think that it chastened them quite a little from sticking with that activity.” “Concerning underpayment and denials of damage caused by Sandy, I would like to suggest that I anticipate the following major flood disaster would boost consumer spending for those who have flood insurance.

Sue Marticek says that she’s seen the disaster recovery for almost two decades, running the long-term recovery group of Ocean County, a catastrophe-related program. Now she has learned from Sandy and established a national non-profit organization. Compass 82 helps the storm victims to navigate bureaucratic hurdles to receive finance and rebuild their lives elsewhere. She is currently helping South Florida people rebound from Michael and Irma disasters.

“It is for a reason that they say that they deny, delay and defend insurance companies,” she said. “Around 50% of the people will never push back when you refuse. And then you are missing it and probably losing another 25 to 35%.  In addition, the cost of the estate cleanout is often not included in insurance claim. And then, they have litigated with the rest of the people and can only force them back.

There were myriad reasons that flood insurance providers are behaving as they did and, so it’s apparent to Marticek that a simplistic approach won’t solve the problem. It is just tragic when people become essentially frustrated.

“These aren’t any bad apples,” she added. “The system needs to be fixed, it’s broken!”It’s disappointing that the lawmakers have not been willing, after all these years, to decide on the necessary reforms to ensure that these issues do not arise again.” She recalled her recent correspondence in another area of the country with a flood victim, which alarmed her.
“We also had someone from Mississippi who heard of our job in Sandy, meeting us recently. They sent us reports and they were some of the same people with some of the same arguments to refuse it,” she added, adding how Sandy had an awkward similarity to the terminology of the flood insurance agency denying the claim based on the exemption from the ground movement. “The same mistakes I do not know how we continue to repeat.”

Menéndez seeks radical changes

Speaker Steve Sandberg from Menéndez claims that reports like this inspired the senator to move. Menendez conferred on the flood insurance scandal following Sandy for a series of hearings. He initially drafted up the SAFE NFIP Reauthorization Act of 2017, which was a package he described as “sweeping reforms to fix duplication, corruption and mismanagement plaguing the process that contributed to delayed recovery for survivors of Sandy,” based on his experience and his interactions with storm victims.

The National Flood Insurance Program Reauthorization and Extension Act 2019, Menéndez had presented this new draft of his proposal. It would prohibit insurance companies from denying claims on ground movements, from manipulating engineering reports and from equalizing sanctions for overpayments and underpayments to eliminate their current motivation to make fewer mistakes on the part of policyholders than they are legally obliged to do.

This measure also requires improved training for insurance adapters, facilitates and makes the appeals process more transparent, allows institutions to make changes so that homeowners receive payments faster after filing claims and allows them to spend part of their insurance money to prevent future storms. It also lowers annual increases to ensure more affordable flood insurance. And if it was made law after the expiry of the current NFIP Congressional permission on Thursday, the program would be extended to 2024, a break from the short-term extension of the last few years, which has become normal, thereby giving the property market stability and protection for policyholders if the government were to be shut down in the future and house sales could stop and delay claims.

The full congressional delegation from New Jersey is behind the Menendez proposal and has increased support from politicians across the whole political spectrum including the two co-sponsors Sens. Marco Rubio and Elizabeth Warren. It stays in committee for the moment, though, and it is uncertain if this will go ahead.

The opposition comes from lawmakers who see the national water coverage as a taxpayer relief for rich homeowners on the beach or something that their supporters believe has nothing to do with congressional districts within their community. Others, such as Rep. Jeb Hensarling (R-TX) have been critical of the flood-insurance program to encourage the victims of floods “to restore your home in the same manner at the same place.”

There’s a concern that it will not be any different for future victims

“There is genuine concern that existing and further flood victims experience the same systemic failures of the NFIP that Sandy survivors are forced to suffer,” spokesman Steve Sandberg said.

“As for Denise Vaccaro, who travels with Sandy’s flood insurance program,” he added, “it had taken her two years to reopen the case.” She recalls her telephone conversations with the lawyer who determined her settlement eventually.

Vaccaro said, “I would not inquire if I didn’t deserve it, I’m only looking for a normal life with my family. It’s just healthy and reasonable to do so. I owned my house, and I paid for my bills. And before she decided, it wasn’t very long. She says,’ Surely to restore your home, you must have more cash. That’s not how you should function!’

Vaccaro finally managed to restore her home through state grants and extra insurance premiums she got, and even retains funds to lift it to 10 feet in the air and secure it against potential hurricanes and also to buy new furniture and supplies. She had to spend lots of her money and lamented the process took too long.

“The insurance companies are only gaining from people in dire danger from a disaster,” she added. “Few citizens were strong enough to fight, and many others were not strong enough to fight. Some people were supposed to go away. So even though she still pays for flood insurance, the way it’s now, she worries a lot about potential hurricanes. I know it’s a business, but you’re dealing with people’s lives.

“In my gut, I always have this weird sensation,” she added, “because it’s hard to believe others. You only hope they’re doing what’s right.