New Jersey Homeowner Sues Insurers over Basement Definition
A homeowner has filed a class action lawsuit in a Newark, N.J., court, accusing some insurers of unjustly denying flood coverage claims.
The suit claims these insurers did this by unfairly classifying residential first floors as “basements,” says an article in Newsday. According to the suit, the companies refused to pay for damaged furniture, rugs and other objects that occupied rooms in split-level houses, sunken living rooms, and even garden apartments.
Adjusters have told many Long Island residents living in split levels, high ranches and similar structures their first floors are basements, notes the article. This leaves the homeowners on the hook for thousands of dollars in losses. The man who filed the Newark suit, Patrick Donnelly, lives in a garden apartment that a flood insurance adjuster deemed a basement. So, he denied Donnelly’s coverage for ruined furniture.
This situation, however, is caused by the federal government’s own definitions. The insurers being sued handle policies for the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program. The FEMA program offers most of the flood coverage in the United States. Most private insurers shy away from flood coverage, and stick to writing policies for damage for wind and fire and similar types of damage.
A basement, claims FEMA, is any room with a floor "below grade on all sides." In effect, this means if the ground level surrounding the room is higher than the floor, it’s a basement. At least one powerful politician takes issue with this categorization. Democratic Sen. Charles Schumer of New York told Newsweek: "It's absurd for a living room or dining room with a floor an inch below ground level to be considered a basement."
"We have invested thousands of dollars in these rooms, and they are taxed as living space," said another frustrated homeowner. "Now the insurance companies are telling us they are basements? It's wrong."