Coastal Insurance Crisis
Toilet Testing Flushes Out Lax
Muddy Ruling on Clean Water Act
Remodeling Pet Peeves
Windstorm policies are pricey and hard
to find; new construction suffers
An ocean view — or even a faint whiff of salt air several
miles inland — carries a high premium along the Atlantic
and Gulf coasts this year.
In the wake of catastrophic insured losses that totaled $61.2
billion in 2005 — of which $40 billion was from Hurricane
Katrina alone — property-insurance companies have been
raising rates and deductibles for coastal windstorm policies.
In some high-risk locations, insurers are pulling out
Despite their use of sophisticated disaster models, insurers
simply didn't anticipate that 2004 and 2005 would be so costly
— seven of the 10 most expensive hurricanes in U.S.
history made landfall during those two years. So even as
insurers paid out claims last winter, they were busy updating
their failed risk models — and they were careful this
time to take into account predictions of higher-than-average
tropical-storm activity for the next 15 to 20 years.
Insurers are also now factoring in a higher cost for "demand
surge," which is the industry's term for the post-disaster rise
in home-repair costs. Past models estimated that importing
supplies and housing nonresident labor — the most
significant contributors to demand surge — added 26
percent to the cost of repairing a house. After examining data
from recent hurricanes, risk modelers raised that number to 40
Because of these and other adjustments, catastrophic
reinsurance costs for coastal properties have gone up between
100 percent and 300 percent this year, says the Insurance
Services Office, a risk-modeling firm based in Jersey City,
Insurance companies regularly buy reinsurance to cover
their losses, and — not surprisingly —
they're passing the higher costs along to policyholders.
For example, Louisiana homeowners are looking at double-digit
increases for windstorm policies, reports the Insurance
Journal. In Florida, state regulators approved a request
by State Farm Florida Insurance Co. to raise rates an average
of 52.7 percent statewide. And in mid-Atlantic states like
Maryland and Virginia, reports the Washington Times,
Allstate Insurance Co. and Nationwide Mutual Insurance Co. have
increased their minimum windstorm deductible from 2 percent of
a claim to 5 percent, a difference that can amount to thousands
Where rate increases aren't feasible, companies are fleeing the
coastal insurance market altogether. In locations deemed to
have "extreme potential for mega-catastrophes to occur,"
Allstate has stopped writing new policies and won't renew
existing policies. Arguing that it's "nearly impossible" to
price insurance when events are so unpredictable, the company
is dropping windstorm coverage entirely in coastal regions of
Texas as of September 15. It has also stated that it won't
renew some 120,000 policies in Florida beginning in November
and that it will no longer renew policies in New York City and
on Long Island.
Members of the University of Wisconsin-Madison team paddle
their way to first place in the 2006 National Concrete Canoe
Competition. The victorious vessel in the American Society of
Civil Engineers event — held in June — measured 21
feet long and weighed 162 pounds.
State Farm — which covers roughly one in five Florida
homes — is also withdrawing from coastal areas. It's
dropping coverage for 1,500 condo associations and reducing
coverage for 39,000 customers. And Nationwide cut back 35,000
policies last year in Florida and isn't taking on new
As a result of this exodus, tens of thousands of homeowners in
coastal areas from New York to Texas are finding that the only
windstorm coverage they can get is from state-sponsored
insurers of last resort.
These state-run windstorm plans are similar in intent to the
National Flood Insurance Program, which was established in 1968
after private insurers refused to cover flood damage. The NFIP
aimed "to reduce future flood damage through floodplain
management," but its critics charge that its primary
achievement has been to shift the burden of rebuilding to
taxpayers' shoulders. Windstorm insurers of last resort are
drawing similar charges; they, too, failed to collect enough in
premiums to cover their losses last year, and have had to make
up the difference with federal funds and statewide
As for builders, problems with affordability and availability
of insurance — including builder's risk — are
"pretty much at the top of our hit parade," says Douglas Buck,
director of governmental affairs for the Florida Home Builders
Association. Homeowner difficulties with procuring coverage are
already causing delays in closing deals, he notes, and huge
increases in premiums are putting a damper on the coastal
housing market. "No insurance — no construction," he
says. "It's a mess." — Laurie
Toilet Testing Flushes Out
Let's face it: No one wants to flush twice — and no
one wants a callback to replace the ineffective flusher. To
avoid installing a dud, check out the seventh and most recent
edition of "Maximum Performance (MaP) Testing of Popular Toilet
Models." The study, prepared by Veritec Consulting of Ontario
and Koeller & Co. of California, evaluates 247 models, more
than double the number of commodes in the edition JLC covered
last year (see Backfill, 9/05).
To simulate waste, researchers used 50-gram logs of soybean
paste encased in thin latex membranes — actually
nonlubricated condoms. The specimens measured about 4 inches by
7/8 inch and could be used multiple times, saving on
preparation and material costs.
Once again, the researchers set the threshold for a successful
flush at 250 grams (roughly 8 ounces), a number derived from a
British medical study that found this to be the average maximum
fecal size. The authors note, however, that the EPA is planning
to require high-efficiency toilets to flush at least 350 grams
to qualify for the WaterSense label, and that some water
utilities require that a toilet flush as much as 500 grams to
qualify for their rebate programs.
Fifty-five models flushed the maximum amount tested — an
impressive 1,000 grams, or four times what most toilets have to
deal with. Toilets from the following brands were represented
in this elite group: American Standard, Eljer, Gerber, Kohler,
Vitra, Western Pottery, and Zurn. More than half of these units
were gravity-flush; the rest were power or pressure-assist
The results weren't quite so stellar for some of the other
models. Seventeen toilets — all gravity-flush —
couldn't purge even the threshold amount. A Komet Deco scored
lowest, clearing a paltry 75 grams. And an American Standard
Cadet turned in the second-worst performance; it managed only
You can download either the entire study or a handy condensed
version that lists the model numbers and performance results of
each toilet at www.cuwcc.org/maptesting.lasso.
— Laurie Elden
Regulations meant to prevent heat-related illness went into
effect in California on July 27. The Cal/OSHA rules require
employers to provide outdoor workers with one quart of
drink-ing water per hour and access to shade for at least five
minutes whenever necessary to prevent or alleviate heat stress.
In addition, employers must train employees and supervisors to
recognize and treat heat illness. The new law replaces
emergency rules put in place in August 2005.
Massachusetts and Minnesota have become the eighth and ninth
states to enact laws that require carbon-monoxide detectors in
residences. The Massachusetts law, effective in March, applies
to all residences, new and existing, that use
fossil-fuel-burning equipment or that have enclosed parking.
Minnesota's legislation, signed into law in June, will be
implemented in stages. Installation of detectors in new
construction becomes mandatory in 2007. Existing single-family
homes have until August 2008 to meet the state standard, and
existing multifamily units must comply by August 2009.
The number of middle-class neighborhoods in each of the
nation's 100 largest metropolitan areas has declined since 1970
and the number of poor and rich ones has increased, says a
study released in June by the Brookings Institution, a
nonprofit research organization in Washington, D.C. The change
was most dramatic in Baltimore, Chicago, Los Angeles, and
Philadelphia, where the number of middle-class neighborhoods
shrank by more than 20 percent.
Dubai-based Emaar Properties, a multinational
property-development firm, purchased John Laing Homes for more
than $1 billion in June. Based in Newport, Calif., John Laing
Homes is the second largest privately held home builder in the
U.S. and has been in business for more than 150 years.
Allegations of kickback schemes continue to dog the title
insurance industry. Two firms that were fined $23.8 million
last year in California (see In the News, 9/05) came to an
agreement in May with New York's attorney general, Eliot
Spitzer. Fidelity National Title Group of Jacksonville, Fla.,
and First American Title Insurance Co. of Santa Ana, Calif.
will each pay $2 million in fines. The companies also agreed to
cut premiums by 15 percent on New York properties that sell for
less than $1 million.
An average of 690 acres a day were converted from agricultural
use in Colorado between 1997 and 2002. "Losing Ground," a
report by the advocacy group Environment Colorado, attributes
the loss to declining agricultural profitability, the
increasing value of farmland, and growing demand for large-lot
(two to 40 acres) residential development.
Simpson Strong-Tie opened a new manufacturing plant in Eagan,
Minn., in May. The 56,000-square-foot facility includes a
warehouse, a contractor training center, and an
8,000-square-foot shop for producing custom parts. The company
expects to cut its lead time to three days from the current
turnaround of five to eight business days for orders from Iowa,
Minnesota, Nebraska, North Dakota, South Dakota, and
A Somerset County, N.J., luxury-home builder was sentenced in
March to 14 days in county jail for his run-ins with building
inspectors and other township officials. The Newark Star-Ledger
reports that John Bossany was charged with 12 municipal
complaints, ranging from improper behavior to simple assault,
and was found guilty on seven counts. His sentence also
includes two years' probation, fines, community service, and
Andersen Corp., a long-time manufacturer of wood windows and
doors, has expanded into the vinyl business. In July, the
Bayport, Minn.-based company finalized the purchase of Silver
Line Building Products, a leading maker of vinyl windows and
doors based in New Brunswick, N.J. The terms of the deal were
Local impact fees on new development in Mississippi are
illegal, ruled the state Supreme Court. The June decision
upholds a 2004 circuit court ruling that defines impact fees as
taxes, which the state constitution doesn't authorize cities to
levy. The case involved the city of Ocean Springs, but home
builders are also pressing the few other Mississippi cities
that have impact fee ordinances to refund improperly collected
In June, the EPA launched "WaterSense"
(www.epa.gov/watersense), a program designed
to encourage water conservation. Just as the department's
Energy Star labels offer consumers a way to identify
efficient appliances, the WaterSense label will adorn products
that meet water-efficiency guidelines. But unlike the Energy
Star program, which relies on manufacturers to certify their
own products, WaterSense will require independent testing to
ensure that the products meet EPA standards.
The NAHB has launched a new program aimed at increasing the
supply of college graduates with degrees in residential
construction management. Because most colleges and universities
that now have construction management programs focus
exclusively on commercial construction, the Homebuilding
Education Leadership Program, or HELP, will offer grants to
institutions that agree to set up or enhance similar programs
on the residential side.
Residents in the Sunshine State have as many as 20,000 new
reasons to invest in solar energy. Under Florida's Solar Energy
System Incentives Program — effective July 1, 2006,
through June 30, 2010 — residential photovoltaic systems
that are 2 kilowatts or higher qualify for a rebate of $4 per
watt to a maximum of $20,000. Residential solar water heaters
qualify for a $500 rebate, and solar pool heaters for $100.
Rebates are also available for businesses, condominiums, and
apartment buildings. The total allocation for the first year of
the program is $2.5 million.
Home Depot is venturing into the convenience-store business,
according to the Atlanta Journal-Constitution. Two pilot stores
in the Nashville area, located in Home Depot parking lots, sell
the usual snack foods and gasoline. The unique draw, however,
is in contractor-pleasing extras like coffee by the gallon and
jumbo car-wash bays that can accommodate the company truck
— even with ladders on the racks. If the pilot stores are
successful, the company hopes to add 300 more by 2010.
Home refinancing numbers continue to shrink, measured as a
share of all mortgage activity. The Mortgage Bankers
Association reported that refinancing made up just 35.3 percent
of all mortgage applications in late June, compared with more
than 80 percent at the height of the refinance boom in
California Building Industry Association economist Alan Nevin
anticipates that overall housing starts in the state for 2006
will total between 170,000 and 180,000, which represents a
decrease of between 15 percent and 20 percent from 2005 levels.
Multifamily construction should remain steady; most of the
decline is expected to be in single-family starts, especially
in San Diego, the San Joaquin Valley, the Bay Area, and the
Pulte Homes took a beating this spring in the softening real
estate market: The nation's largest home builder reported that
net new orders for April and May were down 29 percent from the
same months in 2005. Richard J. Dugas, Jr., president and CEO
of Pulte, attributed the decline to higher interest rates,
higher cancellation rates, and a large inventory of available
Muddy Ruling on Clean Water
The Supreme Court announced its decision on two wetlands cases
on June 19. A 5-4 vote sent the cases back to the lower courts
for retrial, but without a majority opinion to guide future
interpretation of the Clean Water Act (CWA).
Both cases were brought by Michigan developers — one by
John Rapanos and the other by June Carabell — and
centered on language in the CWA that defines navigable waters
as "the waters of the United States, including the territorial
seas." Historically, the U.S. Army Corps of Engineers has
interpreted this broadly to include nonnavigable bodies of
water and wetlands that may drain into an interstate
The Rapanos case hinges on whether the wetlands are part of the
drainage system of Lake Huron, which is 11 miles from the
nearest of the three properties under review. Carabell's
wetlands are bordered by a man-made berm, but the corps argues
pollution still may overflow into a ditch that eventually
drains into Lake St. Clair one mile away.
Of the nine justices on the court, four held the opinion that
the CWA applies only to waters with a "continuous surface
connection" to "a relatively permanent body of water connected
to traditional interstate navigable waters."
Four other justices argued that the CWA was purposely written
broadly to allow the corps to carry out the intent of the
legislation, which is to regulate pollution of interstate
Justice Anthony Kennedy cast the deciding vote to send the
cases back to the lower courts for additional consideration.
Rather than join in either opinion, he maintained a third
position — that technical and scientific judgment should
be applied on a case-by-case basis to determine whether a
particular piece of property has a "significant nexus," or
connection, to a navigable waterway.
The regulatory impact of the ruling is unclear. Carl Pope,
executive director of the Sierra Club, issued a statement
predicting that the decision would "lead to endless
administrative proceedings and legal challenges in the lower
courts." He urged passage of the Clean Water Authority
Restoration Act, which he said clarifies the intent of the
R. Randy Lee, chair of NAHB's legal affairs committee, said he
too expected litigation over the corps' regulations. He advised
builders to "carry a copy of this decision in their pocket."
— Laurie Elden
What are the biggest beefs contractors and homeowners have
with each other during remodeling projects? Payment problems
and missed start dates, according to a recent survey sponsored
by Kimberly-Clark DIY, a Roswell, Ga., company that sells
For homeowners, the top complaint — selected by more than
a third of respondents — was that the contractor didn't
begin the job on schedule. In second place was "When the
contractor increases the price of the job after it is under
way"; it was chosen by about a fifth of those surveyed. Another
fifth objected to the mess left behind by the contractor, and a
few homeowners — 4 percent — selected "grumpy
workers" as their big beef.
Most contractor responses revolved around payment issues. About
a quarter of the contractors surveyed selected "Customers who
ask you to do work that's not part of the job for no additional
money" as their biggest gripe, with "Customers who don't pay in
a timely fashion" close behind. Penny-pinching clients who try
to whittle down the price after the job is done snagged third
"Grumpy clients" wasn't an option, but "Customers who are never
happy" was, and about a tenth of respondents chose it as their
No. 1 grievance.
So what's a contractor to do? Be on time, use change orders,
keep the site clean, and quit being such a grouch.
— Laurie Elden
Building codes, unfortunately, don't come with secret decoders
that can decipher dense and complicated language. The next best
thing may be this illustrated guide to the stair-building
portions of the IRC, created by the Stairway Manufacturers'
Association (SMA), a nonprofit organization in Westminster,
The SMA publication "Visual Interpretation of the International
Residential Code 2006 Stair Building Code" covers sections
R311.5 (stairways) and R312 (guards). It includes photos and
drawings marked with required measurements such as riser
height, tread depth, and stairway width. On the last page is an
actual-size template for testing whether a rail section meets
the R315.2 Type II handrail grip size requirements. The SMA
recommends cutting it out and laminating it for use in the
You can download the 16-page document for free from
Illustrated guides to the 2000 and 2003 IRC are also available
at the site.
Written as a best-practices guide for designers, builders,
and owners of wood-frame residences, "Moisture-Resistant Homes"
is a new offering from HUD and the Partnership for Advancing
Technology in Housing. It provides illustrated design
suggestions for water-resistant roofs (primarily composition
shingle), walls, and foundations, plus techniques for
controlling humidity inside homes.
The 112-page publication also contains maps showing the
intensity of wind-driven rain, humidity, condensation, and the
like in various regions of the country; its final 20 pages
target homeowners, with room-by-room instructions for detecting
and correcting moisture problems.
Download the guide for free at
or buy the printed version for $5 by calling 800/245-2691
and choosing option 1.