(Recasts; final paragraph adds North Carolina's policy on
By Beth Pinsker Gladstone
NEW YORK Nov 1 The governors of New York, New
Jersey and other states have warned insurance companies not to
charge hurricane deductibles costing tens of thousands of
dollars to homeowners who file claims for damage from Sandy
because the massive storm was labeled a "post-tropical storm" by
the time it hit land.
Many homeowners have already filed insurance claims in the
wake of Sandy. While hurricane deductible clauses are written in
various ways, many designate a higher deductible to be paid for
named storms designated hurricanes, said Robert Hunter, director
of insurance for the Consumer Federation of America.
While a typical homeowner policy has a deductible of a flat
fee like $500 or $1,000, hurricane deductibles are a percentage
of total home value, typically 1 to 5 percent. A $400,000 shore
house, with a 5 percent deductible, would have out-of-pocket
costs of $20,000.
"Homeowners should not have to pay hurricane deductibles for
damage caused by the storm and insurers should understand the
Department of Financial Services will be monitoring how claims
are handled," New York Governor Andrew Cuomo said in a statement
issued late Wednesday.
New Jersey, where the storm first made official landfall,
said the hurricane deductible would not apply. The change in the
storm's designation to post-tropical cyclone just before hitting
the barrier islands, "will save a lot of people a lot of money,"
said Ed Rogan, spokesman for the New Jersey Department of
Banking and Insurance.
Connecticut made a similar announcement, as did other
states. The Maryland Insurance Administration said in a
statement: "The National Weather Service did not issue hurricane
warnings for any Maryland counties. Therefore, percentage
deductibles will not apply to homeowners policies in Maryland
for damage caused by the October 29-30 storm."
On the other hand, some states affected by Sandy will allow
hurricane deductibles to come into play. In North Carolina, for
instance, Sandy was still a hurricane when it passed by the
state, said Kerry Hall, spokesperson for the North Carolina
Department of Insurance. "Secondly, North Carolina policies use
named-storm deductibles instead of hurricane deductibles."
(Additional reporting by Ashley Lau; Editing by Dan Grebler;
Follow us @ReutersMoney or here.
Reporting by Linda Stern.)