Homeowners insurance landscape changes post-disaster
Last year’s Hurricane Sandy dealt a powerful blow to the Eastern U.S. The powerful storm caused significant damage to homes and other properties in several states. In New Jersey, floods causing the most damage, putting heavy strain on the Federal Flood Insurance Program, which accounts for the majority of flood insurance protections in the country. The disaster brought several problems within the insurance sector to light, causing New Jersey lawmakers to take action on the issue of homeowners insurance in order to avoid future turbulence.
Residents remain confused regarding flood insurance
Homeowners throughout New Jersey suffered in the wake of Hurricane Sandy. The storm caused modest damage with its strong winds, but floods proved too much for many properties to bear. Because most of the homeowners insurance policies in the state do not offer flood coverage, much of the damage that was caused by flooded remains unresolved. This caused confusion among residents, many of whom had never heard of the National Flood Insurance Program before the disaster struck. Once informed that flood insurance is largely a federal matter, the recovery effort proved to be arduous and slow going.
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New law forces insurers to provide more information to policyholders
New Jersey legislators have taken action on the issue, hoping to dispel any confusion that could be caused by future disasters. This week, Governor Chris Christie has signed into law a bill that forces homeowners insurance companies to provide a one-page description of the coverage they are providing to policyholders. These descriptions are meant to be as thorough as possible without being overtly confusion for consumers. Lawmakers believe that this measure will help consumers better understand the protections they are paying for.
State has no authority in flood insurance
State lawmakers have no authority over flood insurance, as this type of coverage is firmly within federal jurisdiction. As such, state officials cannot introduce any laws that force homeowners insurance companies to offer flood insurance protections. The National Flood Insurance Program, which accounts for the majority of flood insurance policies in the U.S., is governed by the Federal Emergency Management Agency, which has been working to reform the federal insurance program for several years.