INSURANCE PLANS LEAVE COSTLY GAP FOR HOMEOWNERS
By Joseph Ax – Staff Writer

The Record, NJ
April 27 2007

Some North Jersey homeowners cleaning up in the wake of this month’s
powerful nor’easter are discovering that they have an "insurance gap,"
with neither their flood insurance nor homeowner’s policy covering
the loss of furniture, electronics and other personal property.

Without insurance compensation, they will have to hope for at
least some relief from the Federal Emergency Management Agency,
which will provide grants to affected families after President Bush
approved emergency aid for six New Jersey counties, including Bergen
and Passaic.

Karina Kocharyan of New Milford left behind a wealth of expensive
belongings when she was evacuated as floodwaters encroached upon her
house. They included Persian rugs worth up to $30,000, antique books
and the pricey broadcasting equipment she uses as a journalist for
an Armenian television station.

Her flood insurance will pay for structural damage, but her homeowner’s
policy does not cover flood-related damage — she is solely responsible
for her ruined property.

"I didn’t know," said Kocharyan, whose home filled with several feet
of muddy water after the Hackensack River overran its banks.

Kocharyan and other homeowners and renters may apply for FEMA aid for
losses that are not covered by insurance. But most personal property
that is not considered essential, such as a second television, is not
eligible for FEMA grants. The federal Small Business Administration
provides low-interest loans to cover other losses.

Flood insurance is provided by FEMA, though it is sold through private
insurance companies. Most homeowners can purchase contents insurance
in addition to regular flood insurance, which only covers damage to
the structure of the building as well as basic basement appliances
such as boilers. The limit for building coverage is $250,000; the
contents limit is $100,000. Homeowner’s policies do not cover floods.

Sometimes it takes a flood to magnify the fine print on insurance
policies for homeowners. Some residents who had heavy losses during
Tropical Storm Floyd in 1999 learned their lesson and bought contents
coverage.

Haydee Mateosian, for example, who lives across the street from
Kocharyan, said she had no contents coverage when Floyd deposited more
than 4 feet of water in her living room. She received only $3,500 from
FEMA and has since paid almost $1,000 extra in insurance premiums a
year to protect the contents of her house — an investment that paid
off last week when her home was again inundated by river water.

Exactly what damages are covered in insurance policies is sometimes
unclear, some residents said. Sedgwick Rodgers, a New Milford resident
whose home sustained extensive losses, said State Farm assured him
when he moved in two years ago that he didn’t need to buy contents
insurance because his homeowner’s policy covered it. Now, he says,
they’ve told him they won’t cover his losses.

"I’m very upset," he said. "I’m going to have to pursue this. It
was misinformation."

A State Farm spokeswoman said the company’s agents explain policies
to homeowners at the time of purchase and that homeowners receive
a copy of their policy and a booklet explaining coverage both after
purchase and at the time of renewal.

Arun Sajnani moved to Fair Lawn a few months ago and says he never
imagined his home could flood. The water in his basement broke his
boiler and sump pump, destroyed some electronic equipment and trashed
his wife’s traditional Indian clothing.

He called his insurance company, Allstate, but was told his policy
won’t pay for repairs or replacements.

"You don’t really get a chance when you’re moving" to spend a lot
of time on insurance policies, he said when asked whether he had
been aware that his policy would not cover flood damage. He was not
required to get flood insurance when he moved, because the home is
not in a high-risk flood zone.

Jamie Willis, an Oakland resident, said her mortgage company required
her to get flood insurance. That was a blessing, as it turns out,
since she’s now filing her third flood claim in the last few years.

Even the most comprehensive policies may not cover everything. Willis
said one of her neighbors watched the floodwaters wash away her
driveway, a cost that she said won’t be covered.

Photo: Karina Kocharyan on the first floor of her New Milford home on
Thursday. Several rugs and some electronic equipment in her basement
were damaged by the flood.

From: Emil Lazarian | Ararat NewsPress