Flood insurance becomes a necessity in NYC

August 30, 2012 09:00AM

Flood insurance is no longer a concern solely for New Yorkers shopping for second homes in Florida; it’s for residents of Manhattan apartments, too. According to the Wall Street Journal, as the Federal Emergency Management Agency has updated its flood-zone maps to designate some New York City locales high-risk zones, banks have begun demanding that purchasers of pricey Manhattan condos buy flood insurance.

New Yorkers in Queens, Staten Island and, of course, the Hamptons were the first to be affected, but Manhattanites and residents in nearby Jersey City are joining the pack. The Journal pointed to a prospective buyer of a fifth-floor unit in a Tribeca condominium who couldn’t secure a mortgage from Bank of America even though the building was already insured for natural hazards by Lloyd’s of London. BofA required a policy underwritten by FEMA’s National Flood Insurance Program. Real estate agent Terrence LeRay said he encountered a similar situation at his 10th-floor condo unit in Dumbo.

“What we see is a map from FEMA,” a BofA spokesperson told the Journal. “If a property shows up to be in a flood plain, and there’s no reason to believe the FEMA map is wrong, we require flood insurance.”

The Journal said National Flood Insurance Program policies have increased 41 percent in the city since 2007. [WSJ] — Adam Fusfeld