Tens of thousands of homeowners who suffered wind and storm damage this week will get financial relief from rulings by several governors that insurers must treat Sandy as a tropical storm and not a hurricane. …
“Whether they call it a hurricane or something else, that translates into the percentage I have to pay to get my apartment redone,” she said before Gov. Andrew Cuomo announced Wednesday that homeowners would not have to pay hurricane deductibles. “I had no idea. It’s crazy, and it’s going to cost so much money.”Homeowners’ insurance policies in coastal areas almost always include a provision that the deductible will be higher when damage is caused by a hurricane than a lesser windstorm. The difference can be steep — in the thousands of dollars — because the regular deductible is a flat dollar amount, while the hurricane deductible is connected to the replacement value of the house.
Right about now dozens of actuaries at all the big insurance companies tossed a huge pile of paper in the air and started to bang their head against the wall.
The title of this story at the NYT is “Governors Promote Lower Deductibles for Homeowners” which is one way of looking at it. The other way is to say, “Governors pander for votes, interfere with the insurance system, annual premiums going to go up up up.”
You don’t get to negotiate your insurance policy terms after the fact. If you wanted a lower deductible then you could have purchased insurance with a lower deductible. If you wanted hurricane replacement value insurance then you could have bought that as well. But if you went cheap and bought the typical policy… then you got the typical policy.
So when the insurance companies start running the numbers they will figure out how much more they’re going to pay out as a result of Gov. Cuomo’s unilateral action. Then they divide that amount over all the policies in the area over 5 or 10 years.
So take your joy now. Because when you get your insurance bill next year something tells me the NYT will not be writing a story about how you can’t afford to pay it.