Making Sense of Hurricane Deductibles

Hurricane deductibles are percentage or dollar deductibles that are higher than those for other perils or causes of loss. They are calculated as a percentage of the dollar amount of coverage on a dwelling.

If the policy has mandatory deductibles, the insurer will not sell homeowners coverage without a hurricane deductible. When a deductible is optional, policyholders may also choose a lower deductible in exchange for a higher premium (a buyback) or a higher deductible for a premium credit.

Insurers in Rhode Island are not allowed to deny coverage based solely on proximity to the coast. The state Department of Business Regulation (DBR) has adopted an emergency regulation effective until August 28, 2008.

The regulation specifies that insurers may apply a hurricane deductible on homeowners insurance of no more than 5 percent of a home’s insured value. The trigger of a hurricane deductible must be clearly stated. Such deductibles will only be in effect for losses during the period when the National Hurricane Center issues a hurricane warning for any part of Rhode Island and will remain in effect for 24 hours after the last warning. Hurricane deductibles shall only apply if a storm is classified as hurricane by the National Hurricane Center. Windstorm deductibles may not be used.

Insurers may offer a flat dollar deductible instead of or in addition to a percentage deductible, but the total deductible may not exceed 5 percent of the insured value of the property. Premium credits or discounts must be provided if policies have hurricane deductibles. Insurers can require mitigation measures only in certain specified zones and must waive the hurricane deductible if the policyholder implements mitigation measures.

Insurers must provide clear and prominent notice of all hurricane deductibles and must offer at least two practical examples. The examples do not have to be tailored to the insured value of the specific property but must show how the deductible works.

For more information on hurricane deductibles call your Soucy agent or visit www.coastalinsuranceri.com.

Protecting Your Home from Flooding

One way to protect a home and its contents from flood damage is to seal the house so that flood waters cannot flow or seep in. It is called “dry flood proofing,” and encompasses a variety of measures, according to the Federal Emergency Management Agency (FEMA). They include:

• Applying a waterproof coating or membrane to the exterior walls of the building.

• Installing watertight shields over doors, windows and other openings.

• Anchoring the building so that it resists floatation.

• Installing backflow valves in sanitary and storm sewer lines.

• Raising utility system components, machinery and other pieces of equipment above the flood level.

• Anchoring fuel tanks and other storage tanks to prevent flotation.

• Installing a sump pump and foundation drain system.

• Strengthening walls so that they can withstand the pressures of flood waters and the impact of debris from a flood.

According to FEMA, flood proofing is appropriate primarily for slab-on-grade buildings with concrete or solid masonry walls. Concrete and masonry are easier to seal, more resistant to flood damage, and stronger than other conventional construction materials.

Check with your local building inspector for applicable regulations concerning flood proofing.