PROBLEMS IN OBTAINING INSURANCE

If you are unable to find an insurance company that will sell you a homeowners or tenants policy, because of your residence’s proximity to the coastline, or if you cannot obtain certain coverage, such as fire or flood insurance, you can turn to special insurance facilities. They include:

New York Property Insurance Underwriting Association (NYPIUA)

NYPIUA is a pool of all insurance companies writing fire insurance in New York State. It offers fire and extended coverage, as well as coverage for vandalism, malicious mischief, and sprinkler leakage to consumers who are unable to purchase this type of insurance from individual insurance companies. However, since coverage offered through NYPIUA is sold at a higher premium than coverage offered in the voluntary market (as a general rule, you can expect to pay 20% more), you and/or your agent or broker should make every effort to get this insurance from a voluntary insurer.

Detailed information is available from the New York Property Insurance Underwriting Association, 100 William Street, New York, NY 10038, (212) 208-9700, or from any licensed agent or broker in this state. Outside New York City, the toll-free information number is 1-800-522-3372.

National Flood Insurance Program (NFIP)

Insurance coverage for losses resulting from floods is for the most part not provided in any of the previously mentioned homeowners or tenants policies. However, property owners can purchase insurance protection against losses from flooding through the NFIP if they reside in a community, designated as a special flood hazard area which implements and enforces measures to reduce future flood risks. Residents of communities that initially participate in the NFIP are eligible for the Emergency Program providing a limited amount of insurance at federally subsidized rates. Once a community adheres to the more comprehensive floodplain management requirements of the NFIP, residents are eligible for the Regular Program under which they can purchase much higher amounts of insurance. The majority of New York State towns, villages and cities are participants in the NFIP.

This program allows homeowners, tenants, cooperative apartments, and condominium owners and condominium associations to purchase insurance which will protect their residences and contents against direct physical loss by flood, loss resulting from flood-related erosion and damage caused by mudslide. In certain cases, the NFIP will pay claims on insured buildings that are subject to imminent collapse or are sinking as a result of erosion so the building can be demolished or relocated before the damage occurs. However, you should read the policy carefully for exact definitions of physical hazards and specific requirements that must be met before the claims will be paid. In some instance, the amounts of claim payments are defined by statute.

Coverage amounts range from $35,000 under the Emergency Program, up to $250,000 under the Regular Program for a single family residential structure and from $100,000 to $250,000 for other residential structures. Contents coverage ranges from $10,000 to $100,000 for residential units. Higher deductibles, over the standard deductible of $1000, are available which can help reduce the total cost of this insurance.

Additional information on this program can be obtained from your insurance agent or broker, or by contacting the NFIP at 1-888-FLOOD29 (356-6329) or TDD# 1-800-427-5593.

Coastal Residents Assistance

Some New York homeowners located near shore or waterfront areas have found it difficult to obtain or keep homeowners insurance. In order to address this problem, the Department has taken the following steps:

1. Established a Hotline (1-800-300-4593) where Insurance Department personnel will listen to your problem and help you obtain the needed coverage.

2. Established guidelines for windstorm deductible notices which must accompany any policy that contains such a deductible. The Department has permitted the use of windstorm deductibles as means of encouraging insurers’ participation in the voluntary market.

Currently, 50 independent windstorm deductible programs (submitted either by individual insurers or groups) have been approved by the Department. Two rate service organizations (AAIS and URB) have filed and received approval for programs on behalf of their member companies that follow the Department’s guidelines. ISO, another rate service organization, has filed and received approval for an optional windstorm deductible program which its insurer members may choose to adopt. The approved programs provide windstorm coverage subject to certain mandatory deductibles depending on the geographical location of the risk. The mandatory deductibles range from 1% to 5% of the insured amount, with optional deductibles available at higher percentages. The event which triggers the use of these deductibles varies widely from insurer to insurer. Some insurers use a Category One Hurricane as the triggering event while others use a Category Two Hurricane. In any event, the hurricane would have to be designated as such by either the National Weather Service or the National Hurricane Center. Other insurers use either a specific mile per hour wind speed as a trigger or a mandatory $500 deductible for all windstorm loss. A summary of all windstorm deductibles approved by the Department is provided in Appendix A.

Due to the increased use of windstorm deductibles by insurers, the Legislature enacted a new Section 3445 of the Insurance Law which called for insurers to provide proper disclosure to their insureds of any windstorm deductibles attached to their homeowners policies. The Department promulgated a regulation that set forth the information to be contained in the notice. In addition to outlining the specific information to be contained in the notice it directed insurers to attach this notice to all new and renewal homeowners policies issued on or after January 1, 1999. A copy of the regulation is provided in Appendix B.

3. Established guidelines for "wrap-around" coverage filings under which fire and extended coverage would be written through NYPIUA and the liability, theft and other coverages would be underwritten by a licensed insurer authorized to write wrap-around coverage. With the fire coverages from NYPIUA and the wrap-around coverages from a voluntary insurer, an insured can obtain the virtual equivalent of a full homeowners policy.

4. Established a Coastal Market Assistance Program (C-MAP), a voluntary network of insurers and insurance producers that assists New York homeowners in coastal areas find insurance coverages.

The program is for owner-occupied, one-to-four family dwellings in the Bronx, Brooklyn, Nassau, Queens, Staten Island, Suffolk and Westchester. On Long Island’s south shore and forks as well as in Brooklyn, Queens and Staten Island the dwelling must be located within one mile of the shore. On the north shore of Long Island and in the Bronx and Westchester, the home must be within 2, 500 feet of the shore to qualify for consideration.

Before applying to C-MAP, a homeowner must have been notified that an existing policy is being cancelled or non-renewed for other than non-payment of premium. In the case of the sale of real estate, the homeowner, or prospective property owner must be unable to find insurance through the voluntary market.

For information about C-MAP call the New York Property Insurance Underwriting Association at 212-208-9898.

Reprinted from New York State's Consumer Guide to Homeowner Insurance.