For many New Jersey residents, Hurricane Sandy meant digging the insurance policy out of the filing cabinet and learning for the first time exactly what their policy covered and what it did not.
Today, the Assembly Financial Institutions and Insurance Committee performed a similar task as it heard testimony from the Department of Banking and Insurance and industry executives about their performance in the weeks since the storm.
Kenneth Kobylowski, the acting DOBI commissioner, said before Sandy, New Jersey had a relatively good homeowners' insurance market, with rates near the national average despite having property values among the highest in the country.
"To have average premiums in the middle of the marketplace is just a testament to how stable, how competitive and how well-run our homeowners' market is," Kobylowski said.
But, he said, that could change in the wake of Sandy, though he told the committee it was too early to know how rates will be affected going forward.
One factor that benefited homeowners was the determination that Sandy was only a tropical storm — not a hurricane — when it hit New Jersey's shores. That meant homeowners avoided higher "hurricane deductibles" attached to their policies.
Bernie Flynn, president and CEO of New Jersey Manufacturers' Insurance Co., said an executive order by Gov. Chris Christie asserting that hurricane deductibles would not apply wasn't exactly popular in the wider insurance industry, but he said he accepts the call and won't dispute it.
That wasn't good enough for Assemblyman Jack Ciattarelli (R-Somerville), who said the determination shouldn't be pinned on Christie.
"You keep returning to the executive order," he said. "In my mind, it's the National Weather Service" that made the call.
The bigger issue, Flynn said, is how to prepare for an even worse storm, "because we know now that the storm can make a left turn into Monmouth County, into Ocean County."
Flynn said his company is working through 43,000 homeowners' claims in the wake of the storm, and an additional 9,000 auto claims. The firm is nearly halfway done processing the homeowners' claims, and has paid out about $100 million. Flynn said that number could triple by the time the storm is over, but he said they were financially prepared for the storm, and won't have a problem paying the claims.
Assembly Majority Leader Lou Greenwald (D-Voorhees) said he wants to look at wider structural questions raised by the storm.
For instance, most homeowners' insurance policies don't cover flood damage. The federal government has a flood insurance program, but it only covers damage up to $250,000 — far less than the value of the average home in New Jersey.
"The cap issue is, to me, a no-brainer," he said. "I mean, we're putting our head in the proverbial what's left of the sand by not addressing this issue."
Homeowners can buy additional insurance to cover losses beyond $250,000, but Greenwald said that tends to be very expensive.
Flynn answered that he'd like to see his policyholders have more coverage, but he said that's a political issue that must be dealt with in Washington, D.C.
Barnes suggested the state should look into requiring all homeowners living in flood zones to get flood insurance. Currently, most have it because their mortgage holder requires it. But Flynn argued the country's highly subsidized flood insurance program wouldn't be able to handle a large expansion of coverage.
Greenwald said he fears most homeowners don't know what their policy covers and what it doesn't.
"You read that policy, you think you're covered, and you may not be. And that's the concern," he said.