In response to the extensive damage suffered throughout the northeastern corridor during October, 2012 as a result of Superstorm Sandy, multiple state insurance agencies are intervening on behalf of homeowners by announcing that they will not be required to pay hurricane deductibles on their insurance policies.  With hurricane deductibles typically in the range of one percent to five percent of the underlying policy, the states of New York, Connecticut, Maryland and, according to media reports, New Jersey have shifted these costs to the insurers.  While the ultimate goal of such states is to alleviate the financial burdens on the policyholders, the states derive their authority for their positions in two different ways:

  1. With respect to New York, Sandy did not have "sustained hurricane-force winds" while passing over the State, and therefore no hurricane deductibles may apply.  Connecticut based its decision in-part on the same principle as well.
  2. New Jersey and Maryland relied upon the fact that the National Weather Service did not issue a "Hurricane Warning" with respect to Sandy.  Connecticut supplemented its position with this as well.

Insurers should expect to work side-by-side with their respective regulators in the upcoming days and weeks to help expedite the settlements of applicable claims.

Click here for the official announcement with respect to Connecticut.

Click here for the official announcement with respect to New York.

Click here for the official announcement with respect to Maryland.