Last week's order by New Jersey's governor standardizing therebuilding codes along the state's coast in the wake of SuperstormSandy will help speed the process of rebuilding, but agents sayproperty owners are just beginning to learn the implications it mayhave on their reconstruction decisions.

On Thursday, Jan. 24, New Jersey Gov. Chris Christie issued anemergency regulation aimed at helping propertyowners rebuild to a uniform standard throughout the state byadopting the Federal Emergency Management Agency's Advisory BaseFlood Elevation.

Under the standard, property owners will need to build toconstruction requirements for a 100-year flood. Buildings will haveto be rebuilt to the height standards outlined under the ABFE map,plus an additional foot to come into compliance with state law.

Non-residential property owners will be allowed to build wetflood proofing structures, which means the structure is designed toflood without affecting the building's integrity.

The order affects 194 coastal communities in 10 counties alongthe New Jersey shore. According to the maps, in some areashomeowners could be required to build to a height of 19 feet.

Cappy Stults, owner and president of insurance agency Allen& Stults in Hightstown, N.J., says his firm began initiatingconversations about the process long before the governor'sannouncement. He says he has been telling homeowners that they needto wait for decisions at the federal, state and municipal levelsbefore deciding to make repairs or rebuilding.

According to one diagram laid out by FEMA under the 2012 FloodInsurance Reform Act, which requires rates to rise as high as 25percent over the next five years, an individual could save morethan $90,000 over 10 years if he or she were to build three feetabove base-flood elevation.

Flood maps are subject to change, says Stults, and he is urgingclients planning to rebuild to do so at a height of three feetabove the ABFE.

Chris Grasso, vice president of personal lines for LibertyInsurance Associates Inc. in Millstone, N.J., says that thegovernor's decision has taken any ambiguity out of the process ofrebuilding.

"You are going to have to make changes," he says.

Without those changes, he continues, homeowners can expect topay substantially higher premiums or be unable to obtain insurancebecause they have not met the minimal requirements FEMA hasset-out.

"No one should rush out and rebuild until they know what theflood requirements are because the result would be extreme andimmediate," notes Andrew C. Harris, president of LibertyInsurance.

Harris notes that the governor's order gives insurers betterunderstanding about underwriting the risks because they nowunderstand they will be writing wind polices for homes that arebuilt to more stringent code.

Micael Isler, assistant vice president for The Property CasualtyInsurers Association of America, underscored this point, saying,"The enactment and enforcement of tough standards for buildingcodes, property development and other loss prevention andmitigation requirements are a key component to long-term naturalcatastrophe preparation."

Julie Rochman, president and chief executive officer for theInsurance Institute for Business & Home Safety, says that it isimportant for the governor to act quickly because "people want somereturn to normalcy."

However, the cost of mitigation will not come cheap, addingbetween $30,000 and $60,000 to the cost of rebuilding the home,says Rochman, according to the governor's figures. However, bygetting out ahead on this issue, New Jersey will avoid "the starkdelineation between what was thrown-up and those [buildings] thatwere built to code" post-Hurricane Katrina in NewOrleans.  

Harris says that Sandy has accelerated the process of gettingthe ABFE out to the public and that has been a headache of sortsfor agents. Usually, there is a six month period of education forconsumers, he says. However, to get the details out tomunicipalities and professionals as quick as possible, the consumerprocess was skipped, leaving it to agents to educate theirclients.

As the re-building process moves forward, property owners willhave their insurance settlement and mitigation grant money from thefederal government to help, but ultimately, the cost will be on theshoulders of the homeowner, says Harris.

And the shore is facing a landscape that may never be the same.Stults notes that it will be a long rebuilding process for thearea.

"There are those homeowners with rentals that want to get theirhouses ready for the summer of 2013," he says. "I tell them tothink. The summer of 2013 is lost; think about 2014."