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Sandy-Affected Homeowners Battle Insurance "Earth Movement" Loophole

The so-called "earth movement" clause in national flood insurance policies has prevented homeowners from getting back on their feet, they say

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    NEWSLETTERS

    A New York senator is urging the Federal Emergency Management Agency to eliminate a federal flood insurance loophole affecting thousands of Sandy victims in New York and New Jersey. Greg Cergol reports. (Published Monday, Aug 26, 2013)

    A New York senator is urging the Federal Emergency Management Agency to eliminate a federal flood insurance loophole affecting thousands of Sandy victims in New York and New Jersey.

    The so-called "earth movement" clause in national flood insurance policies reads, "We do not insure for loss of property caused directly by earth movement even if the earth movement is caused by flood."

    Sen. Kirsten Gillibrand blasted the clause as "bureaucratic fine print" that was preventing Sandy-affected homeowners from getting back on their feet. 

    Freeport homeowner Stephen Parke said it was "like getting punched in the stomach from Sandy, then getting hit in the face when they deny you." 

    Parke's home was condemned after Sandy floodwaters damaged its foundation. Then his insurance carrier in the FEMA-managed flood program refused to pay the full value of his $180,000 policy.

    Instead, Parke has received only $85,000 on his claim. It's not enough to rebuild, he said. So nine months after Sandy, the damaged home remains vacant, with Parke, his partner and son living in a rental apartment.

    The home is scheduled for demolition Wednesday.

    "I had a policy. Why shouldn't our policy cover us?" asked Parke.

    According to Parke, he will have to take a loan to replace the home Sandy destroyed.

    "It's immoral," said Garden City lawyer Jerry Reisman, who represents about six homeowners fighting the earth movement clause.

    "If you're buying flood insurance, you should be covered for a flood."

    FEMA did not respond to requests for comment.

    In the past, FEMA has reportedly said it is "following the law." Homeowners whose full claims are denied can appeal, but in Parke's case, his appeal was also denied last week.

    "We thought we were protected," Parke said. "So did a lot of other people."

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