By Anthony Rifilato
So it came as a shock to the Landeckers when their insurance company, Encompass, informed them late last month that they were not renewing their homeowner's insurance policy in October, because, the company said, their home is close to the water. In a letter, Landecker said, he was told that because the 2004-05 hurricane season was so devastating - and with more storms expected this season - Encompass was making "difficult decisions." Now Landecker is in the precarious position of searching for a different home insurance carrier, and he may have to pay much more for his policy, he said. "It's shocking: I pay all this money in taxes and now I can't even get insurance?" Landecker said he paid $1,700 a year for his insurance.
He is one of thousands of South Shore residents whose policies are not being renewed by large insurance companies, such as Allstate, State Farm, Liberty Mutual and others. Companies have shifted away from writing such policies as fears of a Hurricane Katrina-like event happening in New York continue to grow. Earlier this year, Allstate, New York's largest insurer, made headlines when it informed 26,000 homeowners in the city's five boroughs and Westchester, Nassau and Suffolk counties that it would not renew their policies.
"The problem from Florida to Maine is that insurance companies are scared," said Denis Miller of the Denis Miller Insurance Agency Inc. in Long Beach, who explained that most companies no longer write policies for homes that are within 2,500 feet of the water. "They are looking at the profit versus the losses, and it's more profitable to get out of the market. They are afraid of that Category 2, 3, 4 and 5 hurricane coming to Long Island."
According to Miller, who is one of the largest flood-insuring agents in New York state, Long Beach residents have it the hardest. "Long Beach is the toughest place to obtain homeowner insurance because it's an all-year residence and barrier island in New York state," Miller said. And while communities such as Baldwin are easier to write policies for than Long Beach, Miller said that the trend is affecting most towns along the South Shore.
"I'm hearing from hundreds and hundreds of people who are being canceled from Allstate and State Farm," Miller said. He added that homeowners have some options, by going to either the New York State Insurance Department or by calling specialty insurance brokers such as his company.
When Landecker learned that his policy was not being renewed, he contacted Assemblyman Harvey Weisenberg (D-Long Beach) and state Sen. Dean Skelos (R-Rockville Centre) for help. Weisenberg said that he has been hearing from a number of his constituents and has begun writing letters on their behalf to Howard Mills, superintendent of the New York State Insurance Department.
"My feeling is that [insurance companies] have to cover all aspects of insurance. They can't cherry-pick," Weisenberg said. "For them to cut back homeowner's insurance on a hypothetical is unfair and unreasonable."
The issue has prompted state lawmakers to sponsor legislation aimed at protecting homeowners and providing them with needed assistance, while calling on insurance companies to reverse course or, at the very least, provide homeowners with policy alternatives.
State Sen. Charles Fuschillo (R-Merrick), for instance, has sponsored a bill that would require insurance companies to inform homeowners about other insurance options. Specifically, the bill would require any insurance company that is canceling, not renewing, or issuing a conditional policy to notify homeowners about possible coverage through the Coastal Market Assistance Program (C-MAP). Gov. George Pataki recently signed it, and Fuschillo said that homeowners must be made aware of C-MAP if their policies are canceled.
"[Insurance companies] just want to cut their losses, and it's wrong," Fuschillo said. "[Homeowners] are shocked that they're being canceled. These are two state programs, and if these companies are going to cancel, we want people to know that these two alternatives exist."
C-MAP, run by the New York Property Insurance Underwriting Association, is a network of participating insurance companies that give special underwriting consideration to helping homeowners obtain insurance. "It's designed to help the homeowner," said Fuschillo. "That's why this new law is critical. It's important that somebody who is being arbitrarily canceled will be protected."
Allstate lauded the legislation, but said its insurance agents already assist customers who are not receiving renewals and that the situation is not as dire as it sounds. "Our impacted customers can work with their Allstate agent to help find replacement coverage," said Brian Pozzi, Allstate's regional counsel. "It's a healthy insurance market here in New York, and coverage is readily available."
On its Web site, Allstate says that hurricanes will become more frequent and severe in the years ahead, making the potential for widespread losses worse. Pozzi said that fixing the catastrophe problem is larger than Allstate and the insurance industry as a whole. The current system, he said, is not equipped to handle another Hurricane Katrina or another mega-catastrophe.
"It's not easy for us," Pozzi said. "We've fought hard for our customers for over 75 years. We just have too much exposure to catastrophe. I think Katrina kind of taught us a lesson. Certainly it has given people pause to stop and think about this type of thing. "
Still, the move by insurance companies has homeowners like Landecker scrambling for new coverage that could cost them more, Weisenberg said. Miller added that state programs such as C-MAP lack the teeth to make a real impact, as more and more insurers are turning away from writing such policies.
"[Homeowners] now have to work hard to find someone to write their coverage, and certainly homeowner's insurance prices are going up," said Miller, explaining that the average premium is around $1,200. "C-MAP hasn't been necessary until now, and can only help to a small degree because there aren't enough companies willing to write near the water. There is no easy solution here. It's all dependent on the weather. Maybe if a hurricane doesn't hit, they'll come back."
Meanwhile, Landecker said that between his exorbitant taxes and lack of coverage, he is looking to leave Long Island when his kids finish school. "There's no future here on Long Island," Landecker said. "It's too expensive."
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More Info
Residents who have had their homeowner's insurance policies canceled for reasons other than non-payment of a premium and would like more information about C-MAP can call the New York Property Insurance Underwriting Association at (212) 208-9898 or visit www.nypiua.com. The New York State Insurance Department has also established a hotline (800-300-4593) where insurance department personnel will listen to your problem and help you obtain needed coverage.
Comments about this story? DMiller@liherald.com or (516) 569-4000 ext. 213.
