Gov’t Officials: No Hurricane Deductible for Sandy Claims

Ten states and jurisdictions in the storm-battered Northeast have declared that hurricane deductibles won’t be applicable for Sandy-related homeowners claims.

These states and jurisdictions are: New York, New Jersey, Maryland, Connecticut, Delaware, Pennsylvania, Massachusetts, Maine, Rhode Island and the District of Columbia.

Officials from these Northeastern states cited how Sandy was reclassified by the National Weather Service as a “Post-Tropical Cyclone” before landing – some officials also pointed out there were no sustained hurricane-strength winds reported in their states and that no hurricane warnings were issued.

Massachusetts was the latest to make the announcement. “None of the specific conditions which Massachusetts insurers require to trigger hurricane deductibles were met for Storm Sandy, according to National Weather Service reports,” the Massachusetts Division of Insurance spokesperson Jayda Leder-Luis told Insurance Journal on Nov. 6.

In New Jersey, Gov. Chris Christie said on Nov. 2 that while Sandy was a devastating storm, “it didn’t meet the regulatory threshold to trigger the application of hurricane deductibles by insurers in New Jersey.”

These announcements have sparked protests from insurance industry groups. The National Association of Mutual Insurance Companies said on Nov. 11 that “it is unfortunate that political expediency can sometimes interfere during a recovery.”

Insurers use hurricane deductibles to help keep costs low, said Jimi Grande, senior vice president of federal affairs at NAMIC. “The uncertainty created as politicians or bureaucrats simply change the rules makes providing coverage more difficult and expensive for everyone. Further, basing these decisions on a ruling from the National Weather Service – a ruling process with no transparency – only adds to the uncertainty,” said Grande.

According to the Insurance Information Institute, states allowing hurricane deductibles include: Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas and Virginia. But whether a hurricane deductible applies to a homeowner’s claim depends on the specific “trigger” selected by the insurer. These triggers vary by state and insurer and usually apply when the National Weather Service officially names a tropical storm, declares a hurricane watch or warning, or defines a hurricane’s intensity.