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 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 over two years amid a slow permitting process and difficulties finding construction workers, 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."

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 are confronted by 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,” said Phil DePaul, CEO of BoomZeal Enterprises.

A $1.1 million tab

Soon after the fire, Chang called his insurance company to assess 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 and some of the flooring, 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, 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.

Meanwhile, Chang paid $9,000 a month for the mortgage on the building.

In 2023, Chang said he started driving for Uber, both partially to make ends meet, and to better understand the company's takeout app.

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

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

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

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. The analysis showed construction material costs soared nationally by more than 20% from January 2021 to January 2022 — one month before Lotus' fire.

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.

"Repairs are costing more," said Loretta L. Worters, vice president of media relations at the Insurance Information Institute, an industry education organization. Lumber, electrical components, big ticket appliances and other 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 impact 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.

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

For businesses and homeowners, previous claims can affect premiums, Worters said. A policyholder could see premiums increase due to many smaller claims over a short period of time, or just one expensive claim over many years, she said.

While insurance costs can push many to opt for bare minimum coverage, Worters said that can seriously hurt policyholders in disasters.

While Chang's policy covered most of his repairs, he said he still experienced some sticker shock over various costs. He said the wok station in his kitchen cost several thousand 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, 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 in 2012, Liz Treston, of Long Beach, feared the worst.

Floodwaters reached the top of the basement stairs of her single-story home, ruining cherished belongings, from family photos to her sister's bridal gown.

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

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

It took five years, and involved run-ins with a fraudulent contractor and navigating insurance bureaucracy.

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, covered roughly 50% of the $400,000 in repairs.

Lifting her home in preparation for future storms cost about $80,000, she said, which NY Rising covered. But other costs, like replacing furniture, her wheelchair and appliances were hers to cover.

Treston, a former Long Beach City Council vice president, found a contractor to handle initial repairs. 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."

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 but she was left with around $200,000 in out-of-pocket costs, which she funded from her 401(k) and help from family and friends, she said.

Treston's community also stepped in, with some contractors donating building materials.

The five-year 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 dropped because the home was elevated, Treston said she has started seeing annual increases of about 18%.

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 have increased through the years, with some paying $1,000 or more.

Kleinfelder advised reviewing their insurance policies every two to three years, bearing in mind up-to-date construction costs and the rising costs of a rebuild.

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

Cutting corners to save is risky

After a home or business owner files an insurance claim after a disaster, it can take months for the company to pay out. It also takes time to find licensed and insured contractors and to secure building permits and inspections.

Chang and Sabellico said it took time to get their permits, and their general contractor struggled to find subcontractors. 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 advance the project.

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.

Unexpected problems, like frozen pipes or cesspool backups, can be disastrous. Amid a stretch of extreme cold, locals 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. A water damage restoration project on a single-level home can cost $10,000 to $20,000, he said. But, he warned against cutting corners to save money and time.

'Recovery can be a long process'

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

Disaster recovery is a difficult and emotional process, but preparation can make it 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, outlining a disaster response and recovery plan is crucial, Rosenzweig said. She recommends business owners have contingency plans if they need to close, a comprehensive insurance policy, a list of reputable contractors to call and a plan to communicate with customers.

Businesses can also call local chambers of commerce, which can reach out to villages or towns to advance permitting processes or offer 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.

Longtime patrons will notice a bigger bar, more event space and a design that emphasizes how Lotus came back from the fire, Sabellico said.

To the right of the 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.