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Monday, July 23, 2012

Hurricane insurance sticker shock will lessen

New Legislation goes into effect in January
Hurricane shutters battened down, waiting for Irene
By Will Collette

Ever since Hurricane Katrina in 2005, coastal residents have been paying much higher homeowner insurance premiums, if they can get conventional homeowners’ insurance at all, to cover insurers’ losses from Katrina and for future risk.

In 2006, after Katrina, Cathy and I received a notice from our long-time home insurance carrier. We were told that, despite having never filed a claim, we were going to be cancelled. And if we wanted to prevent that from happening, we had to install what we discovered were very expensive, hurricane-proof window and door guards.

A gathering of insurance executives
The other choice was to go into the state’s guaranteed coverage high-risk pool where you paid high premiums for very basic coverage.

We figured, in the long run, we would invest in armoring the house for our own safety and peace of mind and to satisfy the insurance company’s demands. What an expense! And we still got whacked on our premiums.

On May 22, Governor Lincoln Chafee signed a new law that might help a little bit. The new law limits the big “hurricane deductibles” insurers charge to only one time per season. If we happen to get hit with two storms in a season, you pay the deductible only on the first one.

Insurers will also be restricted in charging “de minimis” surcharges. Last year, some homeowners filed relatively small claims for losses, such as food spoilage, due to electrical failures caused by Tropical Storm Irene. According to the Block Island Times, when they submitted these claims, their insurers hit them with a $500 rate increase for reporting the loss.

The state will also set up a non-binding, “non-adversarial” (whatever that means) alternative dispute resolution process to make it easier for homeowners and their insurers to come to terms.

The Department of Business Regulation will also create a new process for the declaration of a catastrophe, that is aimed at the problem where a notice goes to a homeowner’s home but the homeowner doesn’t get the notice because the home is wrecked and the homeowner can’t get in.

It will set up a more sensible process for notification and filing, as well as provide a reasonable grace period for premium payments and temporary postponement of cancellations after a weather emergency.

The bill is H-7484A and its prime sponsor was Rep. Brian Patrick Kennedy.