Damian Young got the news last fall by mail: Allstate was dropping him, and he’d have to find another insurance company to get coverage for his brownstone. “[The letter] alluded to Hurricane Katrina and said they’re unable to carry the risk of living in coastal areas,” says the actor. “I live in Park Slope. I was like, What? This doesn’t make sense!” Nearly a year later, his neighbors are getting Dear John letters, too, from Allstate and other firms, some pointing to the chances of “similarly destructive storms” in the area. In fact, it’s happening all over Brooklyn, and “I see two or three nonrenewals each week,” from Bayside to the Hamptons, says Ruchman and Associates insurance broker Jonathan Banach. In some cases, homeowners are being re-upped, but at triple the fees.
New York is certainly not immune to hurricanes. Ours is a coastal island city, and even if you’re a half-mile inland and can’t see the water, that’s a small distinction to a swirling storm a thousand miles wide. (The house pictured, in Ditmas Park, is about three miles from the bay, and its owners were just cut loose by Allstate.) According to the Climate Institute, a nonprofit environmental group, the city is “quite vulnerable” to hurricanes and nor’easters, thanks in part to “the area’s nearly 1,500 miles of coastline, and that four out of five boroughs are islands.” But some owners contend that rejections aren’t based on real risk. (One Gowanus Lounge blogger writes, “I live on Metropolitan and Manhattan in Williamsburg at the top of the hill and we were canceled too. We’re not even in the flood zone!”) “There’s no differentiation [in terms of] distance to water,” Banach says of the cases he’s seeing. In brief, the law allows insurers to drop 4 percent of their policyholders when they see elevated risk, and they’re doing just that. Allstate, for its part, issued a statement about what it calls our “catastrophe-prone area,” saying it is forced “to explore options to manage our exposure in order to better protect our customers.”
For now, some other firms are taking on rejects—Young found an underwriter through his insurance broker, and the state also offers some coverage—but usually at higher rates. There’s no question, though, that the recent spate of cancellations is causing agita. “Used to be if you’ve had no losses, you got renewed,” says Banach. “They don’t care now.”