Hurricane Deductible Triggers – New York State is Seeking to Establish Standards of Application

If you live in an area of this country which is prone to hurricanes, you likely have a homeowner’s insurance policy which includes a separate deductible for a hurricane or windstorm event. A reoccurring question which plagues homeowners is: “When exactly does this deductible apply?”

A proposed bill in the New York State Assembly, A2729, seeks to “establish standards for hurricane windstorm deductibles.”¹ The bill seeks to “creat[e] uniformity in the operation of such deductibles with respect to the triggering event.”

As it stands, in New York the triggers for hurricane deductibles vary from carrier to carrier and can be listed in the policy as a simple: “category 2” hurricane, to the complex jargon of:

[A]ny windstorm loss that occurs 12 hours before a hurricane begins resulting in Category 1 hurricane force winds or hurricane force winds of a greater velocity in any coastal county, regardless of the specific location of your property, and ends 12 hours after a hurricane resulting in category 1 hurricane force winds or hurricane force winds of a greater velocity in any coastal county, regardless of the specific location of your property.²

Clarification for policyholders is needed as the deductibles themselves increase tremendously in the event of a hurricane or windstorm. Like the triggers, the deductibles vary greatly depending upon your carrier and policy. For example, some carriers have a $1,000.00 deductible for a category 1 hurricane, which increases up to 5% of the policy limits for a category 2 hurricane.³ This means that for a home insured for $500,000.00, if a category 2 hurricane takes place, your deductible increases from $1,000.00 to $25,000.00.

As hurricane seasons approaches, take the opportunity to review your policy and determine exactly what your deductibles are and what triggers are needed to make that deductible applicable.

As always, here’s a (mildly) related tune and a flashback to some awesome 80’s hair metal: The Scorpions with “Rock You Like a Hurricane.”

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¹ http://assembly.state.ny.us/leg/?default_fld=&bn=S02032&term=2013&Text=Y
² http://www.dfs.ny.gov/consumer/homeown/awindded.pdf
³ http://www.dfs.ny.gov/consumer/homeown/awindded.pdf