Homeowners in six states hit by Irene escape hurricane deductibles

Home insurance policyholders don't need to pay hurricane deductibles for wind-damage claims in areas where Irene was designated a tropical storm rather than a hurricane, insurance regulators say.

Connecticut, Maine, Massachusetts, New Jersey, New York and Rhode Island allow hurricane deductibles to be included in homeowner's insurance policies; these deductibles normally are higher than for other types of natural disasters. But since Irene was classified as a tropical storm in those six states, wind-damage claims stemming from Irene are not subject to hurricane deductibles -- potentially saving policyholders thousands of dollars.

As of Sept. 2, state officials in Connecticut still were negotiating with some insurers on waiving the hurricane deductible. Among the insurers that are not imposing the deductible are The Hartford, Liberty Mutual, Nationwide and Travelers. "There is no question that Connecticut was hit by a damaging storm, but it wasn't a hurricane when it reached us," state Insurance Commissioner Thomas Leonardi says.

In New York, Benjamin Lawsky, superintendent of the state Department of Financial Services, says: "Homeowners are suffering terribly from this storm, and we will continue to ensure that insurers do not abuse those they insure … by forcing homeowners to pay big hurricane deductibles that just don't apply."

A hurricane deductible is based on the percentage of a home's insured value, according to the Insurance Information Institute. For instance, if a house is insured for $200,000 and has a 2 percent hurricane deductible, the first $4,000 of a hurricane-related wind claim must be paid by the policyholder.

Hurricane deductibles typically vary from 1 percent to 5 percent of a home's value, according to the Insurance Information Institute. In some coastal areas that are particularly susceptible to high winds, hurricane deductibles may be higher.

Standard deductibles for other types of losses are flat dollar amounts, such as $500 or $1,000. For Irene-affected homeowners in Connecticut, Maine, Massachusetts, New Jersey, New York and Rhode Island, standard insurance deductibles will apply.

Across the country, 18 coastal states have hurricane deductibles for homeowner's insurance policies.

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