Posted: 8:11 p.m. Saturday, Nov. 10, 2012

MANAGING YOUR FORTUNE

Will Superstorm Sandy hike insurance rates for Florida?

By Gail Liberman

As another major storm threatened the northeast, Palm Beach insurance broker Joseph Gendelman was earning his keep dealing with at least 60 clients affected by Superstorm Sandy.

Reached in New York, the president of the Palm Beach-based insurance brokerage, Bruce Gendelman Insurance Services, was assessing the impact of the damage.

The extent of the damage was not yet clear as many clients had not yet been to their homes. However, Gendelman anticipates clients are confused about how much flood and windstorm insurance should cover.

Flood involves rising water while wind covers damage triggered by things like water pouring into the house because a window is blown out or the roof is damaged.

Many experts indicate the economic brunt of the hurricane may be felt by FEMA’s National Flood Insurance Program — not necessarily by the insurance industry. That is — if Superstorm Sandy’s victims obtained flood insurance coverage. That’s a big “if.”

Gendelman stresses that the most you can get through the National Flood Insurance Program is $250,000 for the structure, $100,000 for contents. He encourages clients with expensive homes to obtain private insurance for excess flood coverage. In fact, he says, he already was writing some new policies while in New York.

Rebecca Korach Woan, founder of another insurance brokerage, Chartwell Insurance Services Inc., Chicago, offers some advice.

Sandy might serve as a lesson to Palm Beachers — and others living in storm-prone areas. Insurers may cut back on writing coverage for coastal residents’ valuables. Those with valuable art or wine collections who can’t obtain coverage, she suggests, might consider a storage facility farther inland that has a strong wind rating.

The good news is that if you have separately insured items — such as jewelry, fine arts or wine — through private insurers, there generally are no exclusions for flood, she says.

Woan cautions that a standalone structure — such as a garage, gazebo or guest house, may not be covered by standard insurance unless it is specifically added to your policy.

Basements and items stored in basements — except mechanical equipment and appliances that can’t easily be moved — typically are not covered by the National Flood Insurance Program. Flood insurance from private companies, though, generally offers broader coverage. Strive for private insurers rated by A.M. Best for better customer service, Woan says.

What about second homes or condos? Expect lower payouts for damage. Claims for secondary residences are calculated based on depreciation rather than replacement cost, Woan says.

Other important factors to consider: Know whether you have coverage for sewer backups and drain backups, which many standard homeowners policies omit unless specifically requested. Overloading of sewer and drain systems, causing water to back up inside the house through toilets and drains, is one of the two chief causes of water damage. Don’t expect that to be covered by the federal flood program.

Everyone wants to know if our homeowners’ insurance rates will rise because of Hurricane Sandy.

Sam Miller, executive vice president of the Florida Insurance Council, says Florida rates may not rise in the wake of Sandy. Don’t count on it, both Woan and Gendelman suggest. Insurance often becomes tougher to get in the wake of disasters. Already, the Biggert-Waters Flood Insurance Reform Act of 2012, adopted last July, phases out reduced premium rates for federal flood insurance on certain properties — including non-primary residences.

And Citizens Property Insurance has said it won’t insure homes valued at more than $1 million. This already threatens to steer Palm Beachers toward higher-cost private insurers.

The latest Northeastern storms certainly can’t help