East Coast homeowners saved from hurricane deductibles
Hurricane Sandy is shaping out to be one of the costliest hurricanes in U.S. history, with early damage estimates in the range of $30 billion to $50 billion, reports Barclays Capital.
For homeowners impacted by Hurricane Sandy, many will not have to pay costly hurricane deductibles before insurance coverage goes into effect.
Various homeowner insurance policies have a deductible based on a property’s insured value, which ranges from 1% to 5%.
For example, if there is a 5% deductible for a home that is insured for $300,000, the homeowner would pay $15,000 before receiving money from the insurance company.
The National Weather Service declared Hurricane Sandy as a “tropical storm” and as a result, homeowners in New Jersey, Maryland, New York and Connecticut are not subject to pay costly hurricane insurance deductibles.
In New Jersey, for example, the Department of Banking and Insurance informed state insurers that hurricane deductibles do not apply because under state law, two requirements need to be met: it must be classified as a hurricane by The National Weather Service when it hits the state and winds must sustain 74mph inland.
Connecticut law must issue a hurricane warning for the state in order for the deductible to go into effect.
“The state moved very swiftly to alert the industry that this storm — although devastating to so many — did not meet the criteria for a hurricane deductible under state law,” said Connecticut Gov. Dannel P. Malloy in a statement.
In New York, homeowners do not have to pay for hurricane deductibles, said Gov. Andrew Cuomo.
"Insurers should understand the Department of Financial Services will be monitoring how claims are handled,” he said in a statement.