New York to Aid Sandy Victims With Flood Insurance Woes

New York will use part of its share of billions of dollars in federal Superstorm Sandy aid to “fully compensate” storm victims who had flood insurance claims denied because of a hard-to-understand rule barring payments for damage caused by earth movement during a flood, Gov. Andrew Cuomo announced Saturday.

Details of the program still have to be released, but news of the state’s aid offer was greeted with joy by homeowners like Stephen Parke and Michele Mittleman, whose house in Freeport, on one of the bays that line Long Island’s Atlantic coast, was wrecked beyond repair by Sandy’s storm surge.

The house took on four feet of oil-soaked water and had to be demolished after the storm, Mittleman said. But the family was paid only half of their $180,000 flood insurance policy after the Federal Emergency Management Agency ruled that damage to the foundation was the result of “the flood contributing to differential movement of supporting soils.”

The government’s refusal to pay left the family without enough money to rebuild. Mittleman, who founded a Facebook group called “Sandy Victims Fighting FEMA,” said the Cuomo initiative has given her hope again.

“It comes as a total surprise. I’m so happy,” she said.

Cuomo said hundreds of New York homeowners with cracked foundations and buckled floors have had insurance claims denied because of the earth movement rule. An unknown number of homeowners in New Jersey and elsewhere are also affected.

“It simply does not make sense that some New Yorkers who were just as hard hit by the same storms as others cannot be compensated for their losses,” Cuomo said in a statement.

A FEMA spokesman didn’t respond to requests for comment, but in the past the agency has said it is obligated to follow rules set up by Congress.

The decision comes as a critical deadline looms for people still fighting for a bigger payment from the insurance companies that administer the federal flood insurance program.

FEMA has given homeowners until the storm’s anniversary to submit a critical legal document called a proof-of-loss form, which acts as an inventory of things they believe should be covered in any insurance settlement.

That may sound simple, but lawyers, building experts and activists have been warning that thousands of storm victims are probably unaware of the form’s existence and could lose out on their right to contest lowballed insurance payments if they don’t complete it on time.

Twenty-two members of Congress from New York and New Jersey signed a letter that U.S. Sen. Kirsten Gillibrand wrote to FEMA Administrator Craig Fugate on Friday asking for a six-month extension.

“Our offices are aware of many families who are still waiting for work to begin on their homes,” the letter said. “To deny these claims based purely on the timing of their paperwork pulls the rug out from underneath homeowners who are relying on their flood insurance policies to repair and rebuild their homes.”

Some people have already signed one loss form filled out by an insurance adjuster. If they are still fighting for a higher insurance payment, though, based on higher-than expected construction costs, they could be barred from collecting if they don’t fill out another form detailing the broader losses.

Efforts to get the word out include a series of automated phone messages being sent out by a storm victims legal aid clinic set up by the Touro Law Center.

“You still have a lot of people with flood claims who are extremely unhappy with what they’ve been paid and are trying to get additional payment so that they can even come close to rebuilding,” said Dennis Abbott, a flood insurance legal expert who has been consulting the Touro clinic.

“This is really all going to come to a really bad result at the end of October,” he said. “People don’t understand that in order to get more money, they have to file a formal proof of loss and they have to file supporting documentation. People are going to miss that deadline. It happens in every hurricane, and it is going to happen here.”