Courtesy of iii.org
After the hurricane Andrew 1992, the insurance companies realized that losses from hurricanes could be much higher than they had previously thought. Hurricane Katrina, 2005, who cost insurance companies more than 41 billion dollars at that time, confirmed their fear. After these extraordinary losses, reinsurance companies, insurance companies that share the cost of claims at primary companies, such as homeowners insurers, said they could not take much risk and the primary companies had to reduce their potential losses.
During the Atlantic Hurricane season, lasting from June to November, every coastal state from Florida to Maine could potentially be affected by storms. Increased development along the coastal cities of these states has put more and more homes at risk for serious wind damage. In order to limit their exposure to catastrophic losses from natural disasters, insurance companies in these states sell households' insurance with percent excesses of gross damages instead of traditional dollar deductions used for other types of losses such as fire damage and theft. With a policy of $ 500 deductible, the policyholder must pay the first $ 500 of the claim from his pocket. However, percentage deductions are based on the home's insured value. So if a house is insured for $ 300,000 and has a 5 percent deductible, the first 1
To a certain extent, insurance companies determine the amount of hurricane or wind storm or wind / hail link, depending on the state in Florida where state law dictates these variables. Insurance companies' hurricane deduction plans must be reviewed by the individual insurance department, where they may be subject to different regulations and laws.
Nineteen states and the District of Columbia have hurricanes: Alabama, Connecticut, Delaware Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia and Washington DC. Below are reports of these states describing hurricane deductions.
Explanation of Terms:
- Beach Plan, Fair Access to Insurance Requirements (FAIR) Plan; and other involuntary or remaining markets: Last resort insurance companies, state pools providing insurance to persons who can not insure themselves on the voluntary market. Beach plans appear in specific coastal areas, defined by zip code, county or geography; FAIR plans are generally statewide.
- Deductible: Sum of loss paid by policyholder before insurance deposits.
- Subsidiaries: A fixed dollar amount.
- Mandatory deductions:
- Market Support Plan (MAP): A voluntary clearing house and referral system aimed at putting people seeking insurance in contact with insurance companies that have agreed to engage in more business.
- Optional deductible: is most used in less exposed areas. Policyholders can choose these higher installments to pay a lower premium.
- Proportion of deductible: calculated as a specified percentage, for example 2 percent of the property's insured value.
- Default deductions: An indication of the households' insurance deductions in the state or area.
- Trigger: An event necessary for the hurricane to be delayed. Hurricane deductibles "triggered" only when there is a hurricane, or a tropical storm. Triggers vary between state and insurers and may apply when the National Weather Service (NWS) "names" a tropical storm, explains a hurricane guard or warns or defines the hurricane's intensity. Triggers generally include a time factor, that is, damage that occurs within 24 hours before the storm is called or a hurricane causes landfire as long as 72 hours after the hurricane is downgraded to a minor storm or a hurricane guard was interrupted.
How To Work With Hurricane Deductions
There are two types of wind protection deductions: hurricane deductions, which only concern hurricanes and wind power or wind / hail damages damages that apply to any kind of wind damage. Percentage deductions usually range from 1 percent of home insurance value to 5 percent. In some coastal areas with high winds, hurricanes can be higher. The amount paid by the homeowner depends on the insured value of the home and the "trigger" chosen by the insurance company, which determines the circumstances in which deductible applies. In some states, policyholders may be able to pay a higher premium against a traditional dollar interest rate depending on how close to the beach they live. In some high risk areas, insurers can not give policyholders this option, which makes the percentage deductible compulsory. (See Infographic: Hurricane Deductibles.)
Florida Hurricane Deductibles
According to the Florida Charter, the application of hurricane deductions is triggered by wind storm losses resulting solely in a hurricane declared by the National Weather Service. Hurricane deductibles apply for damage arising from the time a hurricane watch or warning is issued for any part of Florida, up to 72 hours after such a clock or warning ends and at any time hurricane conditions exist throughout the state.
The hurricane hurricanes and their triggers are laid down by law and are the same for the private or regular market, like Florida? s Citizens Property Insurance Corporation (CPIC), the state program providing proprietary insurance to consumers. The hurricane deductible only applies once during a hurricane season. All insurers must offer a hurricane deductible of $ 500, 2 percent, 5 percent and 10 percent of the political housing or structure limits. The percentages are based on the total value of the home. Under Florida law, the property insurance rate must include limitations or credits. These apply to property insurance premiums. These discounts are only available for residential and commercial residential property. See the Florida Insurance Office Regulations for details.
CPIC (Citizen), Florida's state-run insurer in the last resort, will insure new homeowners in high risk areas and others who can not find coverage on the open private market. Under Florida law, citizens can write a new insurance policy only if no comparable private market coverage is available or comparable private market premiums are more than 15 percent higher than a comparable citizenship policy. See website for details.
Florida Market Assistance Program is a free reference service designed to match consumers who can not find property insurance with Florida licensed agents and insurance companies that write new business. See the website for details.