Gov. Andrew Cuomo inserted himself into a potential tug-of-war between insurance companies and policy holders yesterday, declaring that insurers should not trigger hurricane deductibles for damages incurred during the storm that rocked New York this week.
If invoked, hurricane deductibles would prove costly for New York’s homeowners, with the deductibles typically ranging from 1 to 5 percent of a home’s value. At the higher end, a policyholder would be responsible for the first $25,000 of damages on a $500,000 property.
While Sandy was no longer carrying hurricane force winds when it landed in New York State on Monday, the way in which insurance companies define storms can be a contentious issue, Stephen Appelbaum, a senior analyst covering the property and insurance industry for Aite Group told The Observer yesterday: “It depends whether the insurance industry decides to play cute.”
In addition to New York, Connecticut and New Jersey government are attempting to short-circuit controversy over how insurers characterized the storm. Bob Hunter, the director for insurance at the Consumer Federation of America, told The Observer that it remained to be seen whether insurance companies would honor states’ decrees.
“They might say, ‘We’re not going for that, there were 80 miles-per-hour winds even if it wasn’t technically a hurricane,'” Mr. Hunter said. “If someone gets a claim for the hurricane deductible, they should scream to governors.”
“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,” Governor Cuomo said in the statement.
The Department of Financial Services, which regulates insurance companies operating in the state, also offered the following advice to policyholders:
DFS urges homeowners who experienced property losses to file insurance claims with their insurers promptly and as soon as possible after losses occur. It is important to provide policy numbers and all information relevant to the loss. To best document losses, homeowners should to take photos or videos showing the extent of the losses before cleaning up damage.
Homeowners should make only necessary repairs to prevent further damage to property, like covering broken windows. Permanent repairs should not be made until after insurers have inspected losses. Damaged personal property should be kept until after an insurance settlement has been reached.
In addition, homeowners should cooperate fully with their insurer and keep a diary of all conversations with the insurance agent, including the agent’s name, as well as the times and dates of all calls or visits.
Insurance modeling firm Eqecat is estimating insured losses of $5 to $10 billion from the storm.