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Seven states and D.C. say no to Sandy hurricane deductibles
By Insure.com staff

Government officials in seven states and the District of Columbia say insurers can't impose hurricane deductibles on Sandy-related home insurance claims.

The move will save homeowners thousands of dollars. Unlike a standard deductible, which is typically a flat amount of $500 to $2,000, a hurricane deductible is calculated as a percentage of a home's insured value, usually anywhere from 1 percent to 5 percent. For example, $500,000 house with a 4 percent hurricane deductible would mean the homeowner would pay $20,000 out of pocket to repair or replace damaged property before insurance payments kick in.

Governors and insurance regulators in Connecticut, Delaware, Maryland, New Jersey, New York, Pennsylvania and Rhode Island declared last week that hurricane deductibles should not be applied to Sandy-related damage.

The triggers for hurricane deductibles vary by state and insurance company. Usually the trigger is when the National Weather Service officially names a tropical storm, declares a hurricane watch or warning, or defines a hurricane's intensity, the Insurance Information Institute (III) says.

New Jersey Gov. Chris Christie said Storm Sandy did not meet the regulatory threshold to trigger the application of hurricane deductibles in his state because the National Weather Service classified it as a post-tropical storm before it made landfall in the state.

"We need to ensure that homeowners are not forced to pay higher out of pocket costs than required as they begin the rebuilding and repair process," Christie said in a press statement.

New York Superintendent of Financial Services Benjamin Lawsky said hurricane deductibles were not triggered in his state because the storm did not have sustained hurricane-force winds when it made landfall.

"Homeowners should not have to pay hurricane deductibles for damage caused by the storm and insurers should understand the Department of Financial Services will be monitoring how claims are handled," New York Gov. Andrew Cuomo said in a press statement.

According to the III, states that allow insurance companies to incorporate hurricane deductibles into their home insurance policies are: Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas and Virginia.

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