What it takes to rebuild a home, business on Long Island after a fire or flood

Four years ago, Michael Chang watched firemen hack into the smoking roof of his Farmingdale restaurant, Lotus, as one question rattled through his mind.

"How do you come back?"

The fire at the Chinese-Japanese fusion eatery in the heart of the village burned through a third of the roof, leading him to shutter his longtime family business, he said.

Chang, 57, and marketing manager, Jim Sabellico, 39, spent over $1 million to rebuild the eatery over two years, during which a slow permitting process and difficulties in finding construction workers delayed progress, Sabellico said.

"I had my first date with my wife here. We got engaged here," Sabellico said. "When I looked at it, I just felt this disbelief. How could this be this place that had so many years of memories around it, and everything just became instantly different?"

Businesses and homeowners impacted by fire, flood and other disasters say the path to rebuilding is challenging as they navigate insurance claims and bureaucracy. The process is also complicated by high costs of labor and materials, experts say. Plus, victims of disaster are confronted by psychological and emotional ramifications: Displacement, income loss, the destruction of irreplaceable heirlooms.

And then, the trajectory of repairs begins.

"Sometimes clients are not going through their insurance and are paying out of pocket, which changes some of their decision-making in terms of how extensive they want the mitigation process to be,” said Phil DePaul, CEO of BoomZeal Enterprises.

A $1.1 million tab

Soon after the fire, Chang called his insurance company to get an assessment of the damage and find out how to rebuild the restaurant, which has been in Chang's family since 1988, he said.

The roof needed to be repaired, along with the interior — the barstools, tables and chairs were all damaged by smoke, Sabellico said. The fire had burned through some of the flooring too, Chang added.

"The physical fire probably touched half of the building, but the entire thing had to be redone, top to bottom," Sabellico said.

The tab: around $1.1 million in total, said Chang and his insurance broker Tom Donohue, the client adviser and unit leader at the Woodbury office of World Insurance. Insurance covered around 90% of that cost and Chang received a $45,000 payment in the weeks after the fire, he said. Insurance would have covered the full cost, but it did not cover upgrades to the restaurant, Donohue added. It took around two months for Chang's insurance company to make the next installment, Donohue said.

At the same time, Chang paid $9,000 a month for the mortgage on the building.

In 2023, Chang said he started working as an Uber driver, both to make ends meet, and to better understand the company's takeout app, he said.

Insurance commonly pays out in installments so the insurance carrier can verify that the funds are being used for the reconstruction, Donohue said.

"Frequently the insured have to go out of pocket, or contractors have to wait to get their check," he said. 

And rebuilding can be pricey. Higher construction costs and supply chain issues have always been a concern for businesses that need to rebuild after a disaster, said Robert Fonti, chairman and founder of the Suffolk County Alliance of Chambers and the Suffolk chairman of the Long Island Business Council.

But the pandemic created labor shortages, delayed shipping and pushed up material costs, making building more expensive, according to a 2022 study by the Associated General Contractors of America. Their analysis showed the cost of construction materials soared nationally by more than 20% from January 2021 to January 2022 — just a month before Lotus' fire.

"Contractors' costs went up. Everything went up," Fonti said.

Natural disasters hit small businesses particularly hard.

Between 40% and 60% do not reopen

after a flood or hurricane, according to a 2020 Federal Emergency Management Agency report.

Inflation and tariffs affect how much an insurer or a claimant ultimately pays for the rebuilding.

"Repairs are costing more," said Loretta L. Worters, vice president of media relations at the Insurance Information Institute, an industry education organization. The cost of lumber, electrical components, big ticket appliances and other building and renovation materials have become subject to tariff-induced price increases and overall inflation, which means "it's costing more to fix that house," she said.

The total number of insurance claims for both residential and business properties have fallen in recent years,

declining by 45.68%

from 2019 to 2025 across Long Island. During the same time period, the average amount paid out for business and residential policyholder claims

jumped 67.2%

from approximately $14,000

to $23,400.

Multiple factors can impact the premiums that both homeowners and businesses pay, Worters said. Factors like size of the business, history of insurance claims, geography, whether it sells food or beverages, and whether the business has vehicles in its name can all impact premiums.

For businesses, she said, a typical policy can cover a variety of issues for small- to medium-sized businesses, such as liability, property or product damage, theft and lawsuits, Worters said. Similar to many standard homeowner policies, flood damage isn't covered unless owners secure a separate policy.

For both businesses and homeowners, frequency and size of previous claims can make a difference in premiums, Worters said. A covered business or homeowner could see their premiums increase due to many smaller claims over a short period of time, or just one expensive claim over many years, she said.

While the cost of insurance can push many to go for the bare minimum in terms of coverage, Worters said that instinct can seriously hurt policyholders when disaster strikes.

While Chang's policy covered the majority of his repairs, he said he still experienced some sticker shock at how much it cost to rebuild his restaurant. For example, he said the wok station in his kitchen cost several thousands of dollars.

"I didn't realize how much [the price] had went up," Chang said.

Difficult to return to normalcy

For Islanders impacted by Superstorm Sandy in 2012, aid from NY Rising helped many return to their homes within five years, Newsday reported. While seven years after the storm, 73% had their claims "closed out," thousands of families were still in the process of seeking funds and repairs.

When Sandy hit Long Island in 2012, homeowner Liz Treston, of Long Beach, feared the worst.

Floodwaters came up to the top of the basement stairs of her single-story home, ruining cherished belongings, from family photos to Christmas decorations, her children's video game systems and her sister's bridal gown.

"That's where all the important stuff was," she said.

Like many homes in her neighborhood and the more than 1,000 homes across the city deemed "substantially damaged" by FEMA following the storm, Treston's was in dire need of restoration.

The restoration took five years, and involved run-ins with a fraudulent contractor, navigating the bureaucracy of her insurance coverage and paying to live in a rental home while house work was completed.

Treston's flood insurance coverage along with funds from NY Rising, a state-run program that distributes federal disaster-recovery funds for homeowners to repair, rebuild or elevate their homes, ultimately covered roughly 50% of the $400,000 in repair costs.

Lifting her home in preparation for future storms cost roughly $80,000, she said, with the cost covered by NY Rising. But many costs, including the replacement of furniture, her wheelchair, appliances and other items were entirely on her to cover.

Treston, a former Long Beach City Council vice president, found a contractor to handle the initial repairs per NY Rising requirements. But the contractor she hired to fix her home after it was lifted did a shoddy job and then bailed, leading to further water damage, she said.

"They ruined the house," she said. "They left it worse than the storm did. So it was uninhabitable."

For two years, while work was done on her home, Treston said she lived in a rental home in Long Beach. NY Rising covered six months of rental assistance. Ultimately, though, she was left with around $200,000 in out-of-pocket costs, which she funded from her 401(k) and financial help from family and friends, she said.

Treston's Long Beach community also stepped in, with some contractors donating building materials from other projects to aid with construction.

The five-year rebuilding process took a psychological and financial toll, she said.

It took "years to feel some sense of normalcy and safety again."

While her flood insurance premiums initially saw a reduction because the home was elevated, thus reducing flood risk, Treston said she has since started to see annual increases of about 18% on the coverage.

Rebuilding an average home would likely cost between $325 and $375 per square foot so a

1,000-square-foot house

should be insured for

about $325,000

said Gerard Kleinfelder, president of PRK Insurance Agency in Melville.

Gerard Kleinfelder, president of PRK Insurance Agency in Melville, said homeowner deductibles for premiums have increased through the years, with some paying a deductible of $1,000 or more.

Kleinfelder said homeowners should review their insurance policies every two to three years, bearing in mind up-to-date construction costs and the rising costs of what it would take to rebuild a home.

Rebuilding an average home would likely cost between $325 and $375 per square foot, so a 1,000-square-foot house should be insured for about $325,000, Kleinfelder said.

Cutting corners to save is risky

Even after a home or business owner files an insurance claim after a fire or flood event, it can take several months for the insurance company to pay out.

It also takes time to find licensed and insured contractors to rebuild and to secure building permits and inspections.

Chang and Sabellico said it took time to get their building permits, and their general contractor struggled to find subcontractors to do the work. Chang said it took around five months to draft the initial restaurant plans and to secure permits, and that the Village of Farmingdale worked with him to get the project moving.

"Whether it comes to contractors taking forever, or material delays or permits, it got to this point where you need to be able to paint the ceilings, but you want to paint the ceiling before you do the floors, but you can't paint the ceilings yet because it's too cold, and you can't put the heat on because such and such isn't done yet," Sabellico said. "It's this constant struggle of the chicken and the egg. What comes first?"

Phil DePaul, CEO of United Water Restoration of Long Island, said

a water damage restoration project on a single level home can range from

$10,000 to $20,000

But, he warned against cutting corners to save money.

Relatively minor but unexpected problems, like frozen pipes bursting or cesspool backups, can have disastrous consequences. Amid a stretch of extreme cold, Long Islanders confronted home emergencies like these, hitting their wallets hard because of emergency pricing, Newsday reported.

DePaul's business runs several home service companies, including United Water Restoration of Long Island, to help mitigate these issues.

A water damage restoration project on a single-level home can range from $10,000 to $20,000, DePaul said. But, he warned against cutting corners to save money.

"The insulation that's inside your walls and ceilings, when that stays wet, your structure is never going to dry. It's like burying a pile of sponges inside of your wall," DePaul said.

The costs and the timeline can also scare some clients off from fully repairing water damage. "Some people take on a degree of risk themselves, and have us do a partial mitigation,” DePaul said.

'Recovery can be a long process'

"The day to prepare is not on your worst day," said Michael Uttaro, Nassau County fire coordinator.

Recovering from a disaster is an incredibly difficult and emotional process, but preparing for the worst can make rebuilding easier, said Claire Rosenzweig, president and CEO of the Better Business Bureau serving the New York, Mid-Hudson and Long Island regions.

For business owners, having a plan that outlines how they've prepared for a disaster, how they'll respond and what recovery looks like is crucial, Rosenzweig said. She recommends business owners have a contingency plan if they need to close, a comprehensive insurance policy, a list of reputable contractors they can call on, and a plan as to how they'll communicate with their customers, she added.

The federal Small Business Administration recommends businesses have funds set aside to cover three to 12 months of expenses in the case of a closure.

"Recovery can be a long process," Rosenzweig said.

Businesses can also call their local chamber of commerce and their county chamber, which can reach out to the village or town to advance the permitting process or offer interim help, said Frank Camarano, president of the Nassau Council of Chambers of Commerce.

Lotus reopened in 2024, Newsday reported. The food hasn't changed much, although the eatery now offers a full gluten-free menu.

But longtime patrons will notice a bigger bar, more space in the back of the restaurant for larger parties and events, and a design that emphasizes how Lotus came back from the fire, Sabellico said.

Just to the right of the restaurant's front door is a silver strip of wall paper — a literal silver lining — where the electrical fire began, Chang said.

Lotus' saltwater fish tank also features two charred chunks of wood — remnants of the restaurant's original ceiling — that now serve as a home for its multicolored fish.

"Rather than hiding from this tragedy, we're going to use it and show what new awesome things can now be created and grown off of that," Sabellico said.