The 2017 Atlantic Storm Season was one of the most active in over a decade with many communities receiving multiple blows in quick succession. This is not the first season where the same communities have been the target of more than one storm within the hurricane season.
As a result of back to back Hurricanes Katrina and Rita affecting Louisiana during the 2005 hurricane season, the Louisiana Legislature passed a statute in 2009 similar to the Florida hurricane deductible statute imposed after Florida’s 2004 multiple hurricanes season. Florida Statute 670.701(5)(a) provides for applying the hurricane deductible once in a calendar year to all covered hurricane losses under one or more policies issued by the same insurer, with subsequent hurricane deductibles in the same calendar year limited to the remainder of the hurricane deductible or applying the all other perils deductible, whichever is greater.
The costs to insurers due to covered losses from Hurricane Andrew in 1992 have led insurers down a long path of varying deductibles to offset their insured risks. Nineteen states and Washington, D.C. now have hurricane deductibles.1 Hurricane deductibles range from flat dollar amounts to percentages, often on insured value, from 1% – 10%. Policy deductible triggers are found in the policy and in some state statutes.
While the Florida deductible statute applies to a hurricane deductible as identified on the declarations page of the policy, triggered at the declaration by the National Weather Service of a hurricane watch or warning to the Florida peninsula, the Louisiana deductible statute is broader and covers the three different wind events and windstorm deductibles found in the policies written in the state:
§1337. Homeowners’ insurance deductibles applied to named-storms, hurricanes, and wind and hail deductibles
A. For purposes of this Section, the following definitions shall apply:
(1) “Hurricane” means a storm system that has been declared a hurricane by the National Hurricane Center of the National Weather Service.
(2) “Named storm” means a storm system that has been declared a named storm by the National Hurricane Center of the National Weather Service.
(3) “Separate deductible” means a deductible that applies to damage incurred during a specified weather event and may be expressed as a percentage of the insured value of the property or as a specific dollar amount and includes hurricane, named-storm, and wind and hail deductibles.
B. For all homeowners’ insurance policies or other policies insuring a one- or two-family owner occupied premises for fire and allied lines, issued or renewed by authorized insurers on or after January 1, 2010, any separate deductible that applies in place of any other deductible to loss or damage resulting from a named storm or hurricane shall be applied on an annual basis to all named-storm or hurricane losses that are subject to the separate deductible during the calendar year.
C. If an insured incurs named-storm or hurricane losses from more than one named storm or hurricane during a calendar year that are subject to the separate deductible referred to in Subsection B of this Section, the insurer may apply a deductible to the succeeding named storms or hurricanes that is equal to the remaining amount of the separate deductible, or the amount of the deductible that applies to all perils other than a named storm or hurricane, whichever is greater. Insurers may require policyholders to maintain receipts or other records of such losses in order to apply such losses to subsequent named-storm or hurricane claims.
Also, like the Florida statute, the Louisiana deductible statute allows the insurer to apply any remaining amount of the first applied named-storm or hurricane deductible to the later named-storm or hurricane in the same calendar year, or the amount of the other all perils deductible, whichever is greater.
Therefore, for those Louisiana communities in and around Cameron, Louisiana, and inland affected by Tropical Storm Cindy on June 22, 2017, and those same Louisiana communities in and around Cameron, Louisiana, and northward to Central Louisiana affected by Hurricane Harvey beginning around August 30, 2017, be sure to bob and weave and keep a full accounting of covered Tropical Storm Cindy losses and the deductible applied to your Cindy claim that may reduce the deductible of any subsequent covered losses due to Hurricane Harvey.
1 AL, CT, DE, FL, GA, HI, LA, ME, MD, MA, MS, NJ, NY, NC, PA, RI, SC, TX, VA and DC. (See, Background on: Hurricane and windstorm deductibles, October 2, 2017, Insurance Information Institute)