Ron and Debbie Gialanze owned a ranch-style home on East Pine Street for 26 years, and raised two children there. When they finished paying the mortgage, they decided to continue paying for flood insurance — a little peace of mind, Debbie said, for residents of a barrier island.
But when Hurricane Sandy hit, it not only destroyed their home, but the flooding from Reynolds Channel damaged its foundation. The Gialanzes thought they would be made whole — after all, they had a $250,000 flood insurance policy with Fidelity.
To their dismay, the company refused to pay the full value of their policy, which would have allowed them to demolish the house and rebuild.
A loophole has raised the ire of the Gialanzes and thousands of other homeowners in New York and New Jersey who filed flood insurance claims but have been denied. A provision of the National Flood Insurance Program, which is managed by FEMA, states that property loss caused by earth movement — even if it is the direct result of flooding — is not covered.
The Gialanzes have been unable to return home since Oct. 28, when they evacuated. They were lucky, they said, to find a home to rent in Levittown, but they are worried that their housing assistance from the Federal Emergency Management Agency will soon run out.
“You figured all those years — and we never put a claim in, not even for Irene — that we’d be OK,” said Debbie. “Now, when we’re ready to collect on it so we can move forward, they’re like, ‘No, sorry.’ They’re not going to give us money for structural damage because of that loophole in our flood insurance policy saying that it’s earth movement.”
U.S. Sen. Kirsten Gillibrand is calling on FEMA to review its policy and reverse the denials, saying that denying the claims “pulls the rug out from underneath homeowners who are relying on their flood insurance policies to repair and rebuild their homes.”
“It is deeply troubling that damages caused by a storm of this magnitude are excluded from flood insurance policies,” Gillibrand said in a statement. “We must ensure that no bureaucratic fine print stands in the way of getting Sandy-impacted homeowners fully back on their feet.”
Rallying for change
A number of Sandy victims, including the Gialanzes, are planning a rally at the Theodore Roosevelt Executive and Legislative Building in Mineola on Aug. 29 to ask for support from their elected officials and to call on FEMA to change the policy. “Thousands of us have paid for flood policies, and we’re entitled to fair claims practices and payment of our policy limits in the event of a flood,” said organizer Michele Mittleman, a Freeport attorney who founded a Facebook page last month called Sandy Victims Fight FEMA.
Mittleman said she was denied full coverage for her home, which sustained extensive damage and was condemned. Her flood insurance coverage, also with Fidelity, totaled $180,000, and to date, she said, she has received just half of that. She was told that the home had a pre-existing settling condition, after Fidelity’s engineer’s report noted some cracks in the sidewalk in front of the house after the storm.
“It wasn’t until I went online and read through the policy — that’s when I discovered this earth movement exclusion,” Mittleman said.
She and others said they believe the clause is being improperly used by FEMA so it can avoid paying homeowners’ claims.
Mittleman hired her own engineer, who refuted Fidelity’s report. She submitted her own report in April, but in June, she said, FEMA made a determination that Fidelity was correct, and her claim was denied. “Many people are still waiting to hear from FEMA about their benefits,” she said, “and don’t know about this exclusion and that they may be denied.”
In a statement, FEMA spokesman Dan Watson said FEMA's top priority is to provide assistance to those in need as quickly as possible, "while also meeting our requirements under the law."
He said that FEMA works with its private sector, write-your-own insurance company partners who sell flood insurance under their own names and are responsible for the adjustment of their policy holders’ claims. Watson said that FEMA administers the National Flood Insurance Program at the direction of Congress. By law, he said, the Standard Flood Insurance Policy (SFIP) only covers direct physical loss to buildings by flooding.