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+--- Thread: Insurance companies told hurricane deductibles are off-limits (/showthread.php?tid=44939)
Insurance companies told hurricane deductibles are off-limits - Kaeden - 11-10-2012
People who take out home insurance plans against hurricane damage, which is appropriate in states at risk, have to pay a �hurricane deductible� if their home is ruined. Given the destruction from Hurricane Sandy, a number of governors have cautioned insurance companies not to charge them.
Anything different with natural disaster
A hurricane deductible is an insurance deductible that has to be paid before the insurance business will pay anything out. Many people do not live in states where hurricanes take place, so it does not matter much to them.
Hurricane deductibles were invented by the insurance industry, according to CNN, the first policies involving them coming out after Hurricane Andrew in the 1990s, but became much more widespread after Hurricane Katrina, according to NOLA.com, site for The Times-Picayune of New Orleans. Many Louisianans first had to pay them earlier this year in the wake of Hurricane Isaac.
The deductible is not a set amount of cash like a normal deductible would be. In fact, it is just a percentage of the home�s value usually.
Governors warn insurance companies not to charge them
There were a ton of homeowners that had their houses wiped out during Hurricane Sandy and had hurricane deductibles. It makes sense that these homes were totally destroyed.
The circumstances for the deductibles have not been met, many governors in these states are claiming. The governors are ordering insurance businesses to pay out the claims, according to CNN.
Never mind that it would seem the right thing to do in the wake of such a large storm, but in New York, New Jersey and Connecticut, an insurance deductible is only required in the case of Category 1 hurricane-force winds, or 74 miles per hour. Governors Chris Christie of New Jersey, Andrew Cuomo of New York and Dannel Malloy of Connecticut state that winds did not reach that speed during the storm.
Another requirement, according to MSN, is that the storm has to be classified a hurricane before making landfall. Hurricane Sandy was de-classified before hitting. Residents of Maryland will also not have to pay their hurricane deductibles.
Not affordable
Reuters points out that Sandy was still called a hurricane when it passed North Carolina, which means the residents will still need to pay the deductible in that state.
Hurricane deductibles vary from state to state and from insurer to insurer. Generally, they are 1 percent to 5 percent of the home's value and with home values being what they are on the east coast, that adds up to a hefty load of cash. In Florida, according to Time magazine, it can be as high as 10 percent of the home's value.