Proposed New York Legislation Seeks To Eliminate Surprise To Policyholders From Large Hurricane Percentage Deductibles

Knowing is half the battle…Do you know the specific amount of your hurricane deductible in your insurance policy? Do you know specifically if that hurricane deductible would apply to a Super-Storm Sandy claim? A Bill recently introduced this New York Legislative Session would specifically answer both these questions. It seems to simplify the amount and applicability of hurricane deductibles to policyholders in New York. Before the last couple of years, some might have scoffed at the idea this would occupy the New York Legislature; a hurricane in New York?! But after the last couple seasons, it makes perfect sense.

Some policyholders are not even aware they may have larger than expected hurricane deductibles. Bill Number S. 1760 provides that the maximum deductible allowed in catastrophic windstorms shall not be greater than fifteen hundred dollars and shall be stated in the policy in numerical terms. The proposed bill also provides that deductibles shall only be applicable to losses occurring during windstorms with wind speeds greater than 125 miles per hour.

Specifically, the proposed addition to Section 3445 of the New York Insurance Law is as follows:

A catastrophic windstorm deductible applicable to a homeowner’s insurance policy or dwelling fire personal lines policy shall not be approved by the Department unless the deductible is applicable only to losses incurred in a hurricane which causes wind speeds of one-hundred twenty-five miles or greater per hour to occur within the State.
The maximum deductible allowed shall not be greater than fifteen hundred dollars and shall be stated on the policy in numerical terms.

Some say there is no substitute for experience. The experience of two active hurricanes affecting New York could have prompted this Bill. “The farther backward you can look, the farther forward you are likely to see.”1 We will continue to monitor this Bill and will share any updates with you.

1 Winston Churchill.

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Comments (4) Read through and enter the discussion with the form at the end
Tim O'Brien - January 28, 2013 10:30 AM

This legislation will surely be popular and prove tough for elected officials to challenge. Meanwhile, shouldn't your firm remind readers of the unintended consequences that WILL result from such legislation.

Without the potential to provide carriers with an adequate buffer of protection from catastrophic losses, there WILL be a reaction from carriers in response should this become effective. Higher costs, minimally. Difficulty obtaining coverage, at any cost, will follow in areas viewed as cat prone.

A suggestion: why not first study the MANY different approaches currently being used by carriers to manage catastrophic wind / hurricane deductibles, and then work with the carriers to adopt a single common approach that is applied to all losses?

Consumers would be better served if legislators instead worked to gain a consensus among carriers on a uniform approach to managing this issue that will not reduce capacity, and would level the playing field so that all carriers can better serve consumers.

Or we can pass what is being proposed, with no buy-in from carriers, and consumers can simply hope for the best outcome. Doing so is naive, at best.

Vladimir - January 29, 2013 8:01 AM

My home flooded with SANDY in NYC, $25,000 of damage and insurance only paid $7000, denying the rest based on this:
The building is a post-firm elevated building in zone A06, in accordance with the Flood policy we are denying non-covered items located below the lowest elevated flood.
I found a FEMA article online stating that this also happened in another hurricane and clients were told to file a LOMAR (land map change) and if you get approved, the limitation stated above will not apply and you will get full payout. the only requirement to get approved is your "lowest grade adjacent to building" is ABOVE your BFE (base flood elevation), which mine IS, according to my Elevation Certificate. But i dont know if applying for this change (application costs $425) will make a difference in my appeal to the flood ins.

Also, the house is a condominium attached to 30 other units all built together in the same year, and i havent heard any neighbors have this problem.
1. WHY are they claiming its an elevated building?
2. WHY are they saying the problem is the home being built in 1987 which is after 1983 (which is when the township entered into the mappings) is the problem, when ALL 30 homes of our complex were built at the same time.

Any advice would be appretiated.

Shaun Marker - February 3, 2013 8:09 PM

Tim, thanks for your wise and thoughtful input.

Shaun Marker - February 3, 2013 8:10 PM


Feel free to contact me at the office to discuss this issue in greater detail. 561-855-2120. Thanks

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