JUDY WOODRUFF: Now we turn to our ongoing coverage of the recovery after superstorm Sandy.
New York City officials say they will demolish about 200 homes in the outer boroughs, including some heavily damaged ones in the Rockaways. Some 200 other homes in the city were so badly damaged by the storm that they likely will be demolished as well.
As residents consider their next steps, they face questions over whether to rebuild and the role of insurance coverage.
Our economics correspondent, Paul Solman, visited the area as part of his reporting Making Sense of financial news.
PAUL SOLMAN: On New York's RockawayPeninsula, workers clearing out Robert Kaskel's ground-floor condo, the former Manhattanite's little piece of paradise, until Sandy hit.
ROBERT KASKEL, Business Owner: The ocean came right into all the properties here. It blew open my front door right off the frame.
The water rushed down into my basement, completely filling the entire basement, and then continued to rise. And I'm sure that there was even wave action inside, because where the water line is, I see traces of water even higher than that.
PAUL SOLMAN: Flood insurance should cover most of an expected $300,000 in repairs.
ROBERT KASKEL: We're going to save the countertop, but everything below it is going to go.
PAUL SOLMAN: The Rockaways are a less-than-mile-wide strip of land that's been hammered before. HogIsland, a 19th century version of the Hamptons just south of here, was completely submerged and washed away by a Category 2 hurricane in 1893.
But Robert Kaskel can't start rebuilding his home just yet.
ROBERT KASKEL: I have got to get my restaurant up and running first, because that's my livelihood, and without any income coming in, I can't even think about how this can even be worked on.
My whole family is out of a job because it's a mom-and-pop business. My wife works with me, my brother-in-law, my sister-in-law. And I even hire my kids in the summertime.
PAUL SOLMAN: A few blocks away, across the peninsula, Kaskel's restaurant, Thai Rock, sits right on top of the water.
ROBERT KASKEL: Everything you're looking at here is destroyed. This used to be a really beautiful restaurant.
PAUL SOLMAN: After a successful career in high tech on Wall Street, Kaskel fled the city, disillusioned, for a life so near, but yet comfortably far.
ROBERT KASKEL: This is a back bar, and then right in front of us now where we can't stand because there's no floor left...
PAUL SOLMAN: Yes, yes.
ROBERT KASKEL: ...this was the bar that people would sit at.
PAUL SOLMAN: But with the water just five feet below the floor in normal conditions, why no flood insurance?
ROBERT KASKEL: It was an expense issue. Flood insurance was going to add almost $1,000 a month onto my already pressured overhead.
PAUL SOLMAN: And where is the financing coming from if you don't have flood insurance?
ROBERT KASKEL: I don't know. I really don't know. I have put in an application with the SBA.
PAUL SOLMAN: But the Small Business Administration has made no promises to Kaskel or to the many other businesses that braved the storm without flood insurance.
In fact, fully 87 percent of Americans don't carry flood insurance, and a startling number of them are near the water.
JACK NOWINSKI, New York resident: It really has been basically total devastation.
PAUL SOLMAN: Eighty-two-year-old Jack Nowinski, whose Rockaway home housed his rare instrument collection.
JACK NOWINSKI: We didn't expect it was really going to happen, and then all of a sudden we see some water in the street.
By the time 20 minutes rolled around, it not only filled up the basement; it went approximately 14 inches above this floor. The first thought was to try to save things, but you couldn't save anything.
And my attitude was life is more important than things; therefore, let's save ourselves. So we went upstairs.
PAUL SOLMAN: A lifelong New York music performance teacher, trombonist, and instrument dealer, Nowinski's retirement savings were in his inventory.
JACK NOWINSKI: I decided that I should invest only in things that I know something about. So, I started investing in some really great instruments.
PAUL SOLMAN: So, this is your children's patrimony?
JACK NOWINSKI: Correct. Correct.
PAUL SOLMAN: And what are the total losses, do you figure, so far?
JACK NOWINSKI: Somewhere between $750,000 and a million dollars.
PAUL SOLMAN: None of it insured -- too darn hard, he says, to do the requisite cataloguing of every item -- but no flood insurance either, despite the hurricane history of the area.
JACK NOWINSKI: Every year, they cry wolf. There was really very, very minor damage as a result of Irene, and only in a few spots. Nobody expected this; nobody could believe it.
PAUL SOLMAN: But a Category 3 hurricane hit in Nowinski's own lifetime, the so-called 1938 Long Island Express.
So how come you didn't think it could ever happen again?
JACK NOWINSKI: Well, I was 7 years old in 1938. And I remember that storm because we were living on Coney Island.
And I remember the rain driving down the street, but it didn't do anything to the basements. It didn't do anything to the electricity where we were. So there was really no major effect that would have remained with me.
PAUL SOLMAN: Insurance companies, however, are in the businesses of remembering storms, which is why so many of them have stopped offering flood insurance, leaving the job to federal and state governments, which have since been criticized for under-pricing flood insurance.
And, yes, says industry spokesperson Bob Hartwig:
BOB HARTWIG, Insurance Information Institute: The rates charged by the national flood insurance program today, in many areas, don't come close to actually reflecting the true risk.
PAUL SOLMAN: Unrealistically low insurance rates, therefore, are blamed for giving the signal that the risk, too, is low and thus a false sense of security in places like the Rockaways.
But that's not the issue for residents like Robert Kaskel, for whom the business rate was too high.
Is this maybe, though, just too dangerous, too risky a place to be doing business?
ROBERT KASKEL: Not a chance. I mean, come on. That is what drives human beings. We seek out things that make our lives more valuable and meaningful. We have got that here.
There's no place that you can go that I have ever been, especially near New York, a metropolitan area with such an amazing, beautiful view -- and the people that come here, every single person, bar none, are blown away, even the ones that come here all the time, by how magnificent, how beautiful, how majestic we are here.
PAUL SOLMAN: For some people, then, life in the storm's way is worth the risk, insurance costs or no. And, it turns out, there can be hidden benefits as well, even for the still-stunned Jack Nowinski.
JACK NOWINSKI: This storm has done something which is a very positive thing for me. It has engendered in me a positive feeling towards humanity again because I have come across many, many very generous and caring people.
PAUL SOLMAN: Nowinski's life savings may be gone, but to some folks in the Rockaways at least, there seems to be more to life than money.
JUDY WOODRUFF: And, online, we hear from more New Yorkers who lost their homes in superstorm Sandy. They now have to decide whether to rebuild or move. That's on the Rundown.