After Sandy, Some Homeowners Spared from Costly Hurricane Deductibles

Some good news arrived Thursday (November 1) for Pennsylvanians where many areas were slammed by Hurricane Sandy: Homeowners there won’t have to pay hurricane deductibles on their insurance claims, which can amount to thousands of dollars.

Governor Tom Corbett added Pennsylvania to the growing list of states — including Connecticut, Maryland, New Jersey and New York — where governors and insurance regulators have told insurers to spare homeowners from the deductibles, after the superstorm whirled across the East Coast, causing heavy wind and flood damage to property and leaving millions without power.

“Insurance deductibles could have added significant costs to Pennsylvanians already struggling to clean up and rebuild after Hurricane Sandy,” Corbett said in a statement. “Insurance companies have deployed catastrophe teams to Pennsylvania and they have been advised that hurricane deductibles should not be applied to any homeowner’s insurance claims.”

A standard homeowners’ policy deductible is a flat fee of $500 or $1,000, according to the Insurance Information Institute. But 18 coastal states allow insurance companies to require much larger deductibles for hurricane damage, which typically range from 1 percent to 5 percent of a home’s value.

Under a policy stipulating a 5 percent deductible, for instance, the owner of a hurricane-hit home worth $200,000 would pay $10,000 for repairs before the insurance company pitched in.

Officials in most of the hard-hit states say the hurricane deductibles don’t apply to Sandy’s damage because the storm was no longer considered a hurricane when it made landfall in those states. 

“Please be advised based on information received from the National Hurricane Center and the National Weather Service, a ‘Hurricane Warning’ was not issued for the State of Connecticut nor did Connecticut sustain hurricane force winds as a result of Storm Sandy,” said a notice released Tuesday by the Connecticut Insurance Department.

Connecticut law says hurricane deductibles can’t kick in unless a warning is issued and the state feels sustained winds of at least 74 miles per hour, criteria that was made stricter after Hurricane Irene wreaked havoc on the Atlantic Coast in August 2011.

“The Insurance Department is monitoring the industry closely to ensure that carriers fully comply with all state insurance laws,” Governor Dannel Malloy said in a statement Thursday.

Homeowners in North Carolina, however, aren’t as lucky. The storm was still considered a hurricane when it made landfall there, so state officials are allowing insurers to require the deductibles, Reuters reports.