Stunned by the devastation wrought by Superstorm Sandy a year ago, coastal towns in New Jersey and New York are taking steps with the help of their insurance brokers to guard against similar damage in future natural disasters.

For some of these middle-market public entities, the powerful October 2012 storm's destruction was unprecedented.

“It was unlike anything Belmar has ever seen,” said Matt Doherty, mayor of the borough, one of New Jersey's popular shore communities that suffered about $130 million in economic damage to public and private property.

In the aftermath of the storm, it was the first time that leaders of the borough of about 5,900 residents knew the community needed flood insurance, Mr. Doherty said.

For Belmar and many other mid-market entities in the public and private sectors in the Northeast, Sandy's widespread property damage and interruption of businesses was a first-time experience.

“Many of our middle-market clients hit by Sandy had never had a claim before,” said Al Tobin, New York-based managing principal at Aon Risk Solutions' property practice.

Belmar has taken an aggressive response, from adding flood coverage in certain areas to physically hardening structures and acquiring equipment, such as generators, to be better prepared for the next extreme weather event.

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Some structures damaged or destroyed by the storm, including the borough's boardwalk and some public pavilions, were not covered by flood insurance, but the replacements will be, Mr. Doherty said.

The boardwalk also will benefit from physical reinforcement, the mayor said. Piscataway, N.J.-based Epic Construction will rebuild the boardwalk as one continuous walkway, rather than the previous individual sections. Pilings will be sunk to a depth of 25 feet, whereas some in the previous supports were as shallow as 6 feet.

On Long Island, the New York state town of Islip also has been rebuilding and fortifying its facilities after Sandy. Looking to mitigate against flood and wind, Islip is in the process of submitting hazard mitigation grant applications that the state will process to submit to the Federal Emergency Management Agency for 16 projects, an Islip spokeswoman said.

The projects include installing generators at several of the town's facilities, hardening critical community buildings to protect them from high winds and flooding, and improving roads and drainage areas in many of the flood-prone coastal areas of Islip, the spokeswoman said.

Hardening efforts include two town hall buildings, structures at Long Island MacArthur Airport and buildings at Islip Beach. Aside from moving back and raising the beach buildings, the township also is seeking to raise roads in flood-prone areas in Bay Shore, East and West Islip, Islip, Oakdale and Sayville.

Belmar is also turning to available public funding for its storm-mitigation improvements. With the help of FEMA, Belmar is building a 1.3-mile dune system for about $8 million and installing a $1.7 million pipe system in nearby Lake Silver to allow for the movement of water. The pipe project is set to begin within 45 to 60 days, Mr. Doherty said.

The borough also has acquired about a $1 million worth of equipment, such as generators and high-water vehicles, at no cost from the U.S. Army.

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In some cases, mid-market policyholders are seeking recommendations on risk-mitigation projects to undertake when applying for FEMA capital grants, brokers said.

“Some clients are looking to us for guidance on capital projects ideas in conjunction with grant money,” said Sam Coburn, New York-based senior managing director of commercial insurance services at Crystal & Co.

In addition to the capital improvement plans, Belmar was fortunate to be able to buy flood insurance after Sandy, because in many cases it's not easy to secure affordable coverage, said brokers serving the middle market. Since Sandy, many commercial insurers lowered flood policy limits, some significantly, forcing clients to buy excess flood cover.

“Where people really got hit harder was when they found that their flood limit had been reduced on renewal, whether they had a loss or not,” said David Finnis, Atlanta-based executive vice president and national property practice leader at Willis North America Inc. “In some situations, limits were reduced by 50% or more and clients then had to buy excess limits. This was more painful than rate increases.”

Some changes in flood limits were more drastic.

“One carrier cut (a client's) limit from $50 million to $5 million at four times the premium,” said Dan Over, New York-based area senior vice president for brokerage Arthur J. Gallagher & Co. Sourcing and placing the remainder of the limit was “a big challenge.”

Alternatively, at least one broker is moving to source primary flood insurance for its mid-market clients that do not participate in the government-sponsored National Flood Insurance Program.

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“Willis is working with an insurance carrier to offer a private-sector alternative to the National Flood Insurance Program, which offers a variety of benefits including competitive rates and coverage terms more favorable than NFIP,” said Mr. Finnis, who declined to disclose specifics for competitive reasons.

Aside from adding coverage, some mid-market organizations are exploring new ways to insure against extreme weather, such as manuscript policy forms or forming captives, and are pressing their brokers for more alternatives.

“Most mid-market (clients) are on a company form,” said Robert Stein, New York-based U.S. middle market chief broking officer for Aon P.L.C. Some, he said, are considering a move to manuscript forms, which are customized for the client, to get more favorable terms.

“Company standard forms have various limitations,” Mr. Finnis said. Some customers, he said, wanted options upon renewal to include coverage excluded by standard forms, such as peril of flood or high-hazard flood, and enlisted their brokers to ensure that such items could and would be included.

Regarding captives, Crystal & Co.'s Mr. Coburn said, “We have seen more middle-market clients participate in group captives, which allow some of the benefits without the administrative burden.”