Have You Asked Yourself, "Do I Need Flood Insurance in a High-Rise?"

Think Your NYC High-Rise Doesn’t Need Flood Insurance? Think Again!

“Flooding? In a high-rise? Why do we need insurance for that?” The skepticism is understandable. When a lot of people hear “high-rise flooding,” their first thought is seeing water on the 20 stories up – an impossible scenario outside a disaster movie. But it’s a more complicated issue than that. 

Hurricane Sandy swept up the eastern seaboard in late October 2012 leaving death and destruction in its wake from Jamaica to Canada. It was the largest Atlantic hurricane in history, affecting 24 states. Storm surge flooded the southern end of Manhattan, including the subway, streets and tunnels. Despite significant evacuation efforts, some NYC high-rise residents were stranded because of power loss and lack of transportation options.
 
That storm resulted in a lot of changes to building codes and requirements that protect high-rises and their most important systems: impact glass requirements, more powerful sump pumps, waterproofed or elevated electrical equipment. In addition to increasing safety and protecting building functionality, the building codes have allowed new luxury high-rises to appear in places like Sheepshead Bay that were devastated by the storm. The New York Times reports that 1 in 8 new apartments will be built in high-risk flood zones, almost 2% more than in 2014.

Those buildings are required to have flood insurance – any building in a flood zone is. What if you aren’t in one?

Why High-Rise Flood Insurance

“Every building needs flood insurance,” explains Sean Kent, senior vice president of FirstService Financial, the banking and insurance affiliate of FirstService Residential. “Flood insurance is not about burst pipes and leaking sprinkler systems,” he stresses. “We’re talking about the FEMA definition of flooding, which is caused by major storms, rivers overflowing and such. FEMA reports that more than 20% of flood claims come from properties located outside a high-risk flood plain. Of course, those properties are less likely to have the right insurance.”
 
FEMA doesn’t provide damage estimates for high-rises, but they say that just 1 inch of water in a 5,000 square foot home will typically result in a loss of more than $53,000!
 
John Foley, vice president of FirstService Project Management, witnessed the devastation and recovery efforts from Sandy first-hand. He spent a lot of time in Far Rockaway in Queens, helping residents of older high-rises in the area. “Contractors were in high demand,” he explains. “If Building A had flood insurance and Building B didn’t, Building A was getting the work done. Contractors were savvy and wanted to make sure they would get paid for their work. If you have a multi-million dollar loss from flooding and no flood insurance, you’re not even going to be able to sign a contract for the clean up work, much less the restoration you need done.”
 
Most of the buildings in that area did have the necessary insurance; Foley says the buildings were rebuilt to a higher degree of quality and safety far more quickly than those that didn’t have the right coverage. Many of them made efforts to waterproof critical systems or move them when possible to help prevent the building being crippled in the event of another flood.
 
Foley notes that even a lot of high-rises in downtown Manhattan had flood insurance when Sandy hit. “Many buildings recognize that, even though the most valuable real estate is the upper floors of the building, the most important systems are in the basement: electrical, boilers, water pumps, even your elevator controls. Without flood insurance, you have no coverage on your most critical systems,” he says.
 

How to Get High-Rise Flood Insurance

Responsible high-rise boards review their insurance policies every year as a matter of course. The right broker will be able to help make sure you get the best value for your insurance dollars, and that includes on flood insurance.
 
“Flood insurance can be expensive, even if you’re not in a flood zone,” Kent says. “But if you work with the right broker, one who does enough business to leverage that marketplace power, the cost of flood insurance is manageable. And if you have even one claim, it more than pays for itself.”
 
Does your building have the right flood insurance coverage? Contact FirstService Financial to have your insurance audited today and make sure your building is protected.

To learn more about emergency prepardness please read our guides below
- Pet Emergency Guide
- Hurricane Prepardness Guide