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Schumer Reveals: As Insurance Companies Flee Long Island, Thousands Of Homeowners Forced to Take Out Expensive "Extreme" Coverage Meant For High-Hazard Businesses

Number of LI Homeowners Forced to Take Out "Extreme" Insurance Because Conventional Insurers Dropped Them Up 100 Percent in Recent Years With Premiums Spiking

Standing with Huntington Homeowner who Allstate Dropped and Now Pays More than Double for Less Coverage, Schumer Blasts Insurance Companies for Leaving LI Families Holding the Bag

Schumer Backs Expansive

Standing with Denise Materazzo, a Huntington homeowner who is one of thousands of Long Islanders recently left in the lurch by their longtime home insurers, U.S. Senator Charles Schumer today blasted major insurance companies for dropping Long Island customers citing bogus hurricane and flood concerns and backed new legislation designed to prevent premiums from skyrocketing. Schumer also released a new report showing that the number of New Yorkers forced to take out "extreme" insurance after being dropped by a conventional insurance company has more than doubled, forcing homeowners to pay thousands more each year on premiums. Schumer's report also detailed that those still with traditional insurers will see their rates jump more than 10% this year alone.

"Long Island families work long and hard for a piece of the American dream - their own home. But increasingly, once they get that home, insurers are now telling them that there's no way to protect it," said Schumer. "By addressing the current state of catastrophe insurance, the commission can find a comprehensive fix so that homeowners will have the security to know that their homes are safe, and insurers won't have the guise of catastrophes to hide behind when attempting to charge outlandish premiums."

In recent years, at least half a dozen companies have either stopped writing policies on Long Island, or refused to renew existing policies, some of which were decades old.  Allstate, MetLife, Travelers, Liberty Mutual and Nationwide are among the insurers who have begun to pull out of Long Island, citing overexposure and risk due to a potential hurricane strike. Despite a state law that prohibits companies from dropping more than 4% of policies in a year, some companies have found a way around the rule, convincing customers to move to other companies, or offering bonuses to agents who persuade "highrisk" customers to drop coverage. However, even the customers the company's keep face spikes in their premiums this year, with Allstate Indemnity hiking its rates a staggering 11% this year alone. Approved rate hikes this year include:



Allstate Indemnity


Allstate Insurance Co.


Nationwide Mutual Fire


First Liberty Corp.


Liberty Mutual


State Farm


For those homeowners who are dropped, finding traditional coverage from another company can be either costly or impossible, with those unable to find traditional insurance forced to resort to "extreme" insurance, known as excess line or surplus insurance. This "extreme" insurance is only available to homeowners who have been denied coverage by every licensed insurer in New York, and is provided by insurers licensed in other states or foreign countries. Despite the fact that this insurance is typically meant for highrisk commercial enterprises, like a fireworks factory, more and more Long Island homeowners have been forced to purchase this "extreme" insurance, typically paying double or more for less coverage than they previously had. In fact, over the past five years, the number of New York homeowners with this insuranceoflastresort has more than doubled, with the highest concentrations in Nassau and Suffolk:








2007 (thru Sept)































For example, Hungtington homeowner Denise Materazzo had been an Allstate customer for approximately four years, and paid $960 annually for her policy without replacement charges, with a $1,000 deductible. Ms. Materazzo filed her first and only claim with Allstate in January of last year after her furnace broke and damaged her basement. Allstate paid the claim without incident, but last April she received a letter from Allstate notifying her that the company was dropping her policy. Allstate cited risk of flood as the reason for nonrenewal, despite the fact that Ms. Materazzo lives miles from the water and her house has never flooded. Since Ms. Materazzo was unable to obtain homeowner's insurance from an insurer licensed in New York State, she was forced to open an excess line policy with Utica Insurance, where she now pays $2,400 annually for her policy with replacement charges, with a $1,000 deductible.


Schumer today unveiled the following plan to combat this rising tide of insurance premiums on Long Island:


  • Push to add changes to the National Flood Insurance Program (NFIP) that would provide relief for coastal areas at risk of hurricanes.  Currently, the NFIP only covers flood damage and does not cover wind damage, leaving this to the private insurance market.  As private insurers have indicated that they are unwilling to cover hurricane damage, it has become clear that the federal government must step in to provide wind insurance coverage in addition to the flood insurance coverage it already provides.  The House of Representatives passed a bill adding socalled "multiperil coverage" to the NFIP, but the Senate Banking Committee's bill did not contain this provision.  Schumer promised to try to get this coverage added to the final bill.
  • Support for higher coverage limits in high cost areas, which would help homeowners in areas with higher construction and rebuilding costs, such as Long Island.  Currently, the maximum coverage amount allowed on a home's structure is $250,000. This is simply not high enough for high cost areas like New York, which is why Schumer is looking to raise the maximum coverage amounts to $335,000. 
  • Schumer will also call on Allstate to restart writing new homeowner claims and not raise premiums.