Hurricane Irene Raises Homeowner Policy Issues

A recent article in the Insurance Journal discussed the difficult questions relating to whether special deductibles should apply to homeowners’ insurance policies for damages caused by Hurricane Irene. The issues arise from whether or not Hurricane Irene was in fact a Hurricane, or whether it was a tropical storm when it struck various states in the Northeast. Benjamin Lawsky, Superintendent of Financial Services explains that the storm hit the New York City area with winds at approximately 60 mph, which would categorize it as a tropical storm. The distinction is that with winds below 74 mph, that storm would be determined to be a tropical storm, and accordingly special hurricane deductibles would not be applied saving homeowners thousands of dollars. Hurricane deductibles can range anywhere from one to five percent but can be higher in coastal areas.

In New Jersey, Commissioner of Insurance Thomas Considine stated that hurricane deductibles would not apply to policy holders in the State, and any attempt by insurers to levy such deductibles would be a violation of the New Jersey Administrative Code. In Connecticut, hurricane deductibles are permitted only on coastal properties, and depending on the insurer, hurricane deductibles could be levied simply by the issuance of a hurricane warning. In Vermont, especially hard hit during the storm, policies do not contain the hurricane deductible language, and thus consumers would not have to consider this aspect of their homeowners’ policy.

As the cleanup from Hurricane Irene continues, it is important for policy holders to take note of the deductibles that should apply based upon State directives and the language in their policies.

Thanks to Andrew Marra for his contribution to this post.

If you have any questions about this post, please contact Greg Vetter at gvetter@wcmlaw.com.