Florida Homeowners Filed Multiple Hurricane Claims, Complain About Multiple Deductibles

Florida policyholders who filed claims for damage from more than one hurricane in 2005 are complaining to Florida’s Department of Financial Services because they are being charged for multiple deductibles if their homeowners policy was written or renewed before May 1 when a bill took effect mandating single deductibles.

Florida’s Department of Financial Services has received complaints from about 30 consumers who thought they were responsible for one annual hurricane deductible, but have been asked to pay individual deductibles for each storm that damaged their property.

Tom Gallagher, Florida’s CFO told the Miami Herald he will ask insurers not to enforce the May 1 effective date.

“After the storms of 2004, we worked hard to ensure Floridians would never again face the financial pressure of multiple hurricane deductibles,” Gallagher said. “I hope that companies would agree it’s unfair to penalize someone just because their policy was renewed in April instead of May.”

Brian Deffenbaugh, staff director for the Senate Banking and Insurance Committee, which drafted the bill that included the windstorm deductible change, said the reason for the May 1 date was to allow insurers time to change policy forms and file new rates with state regulators. Insurers also needed 45 days to notify policyholders of the change, he said.

One homeowner complained to the DFS that Hurricane Katrina caused roof, gutter and fence damage; and then Hurricane Wilma tore up another portion of roof and blew away a screened pool enclosure.
Her insurer, The Hartford, is asking her to meet the deductible, 2 percent of insured home value, for each claim, amounting to more than $15,000 in out-of-pocket expenses.

Non-hurricane related losses have a $500 deductible, while hurricane deductibles cost 2 to 5 percent of a structure’s insured value, depending upon which policy the homeowner chooses.

Some insurers, like State Farm, and Citizens Property Insurance, the state’s insurer of last resort, aren’t applying the multiple deductible at all this year, regardless of the law’s effective date.

“The spirit of the law was that Floridians wouldn’t have to face multiple deductibles again,” Justin Glover, a Citizens spokesman told the Herald.

Nationwide is applying the annual deductible to all policies after the May 1 effective day, regardless of their renewal date. Others such as Allstate Floridian, however, said they would follow the letter of the law.

Gallagher said if insurers insist on charging homeowners more than one storm deductible, he may work with lawmakers next March to get permission to reimburse them from the Florida Hurricane Catastrophe Fund. Last December, legislators earmarked $150 million from the catastrophe fund to reimburse homeowners who were hit by multiple deductibles last year. About $43.6 million has been paid out to 2004 storm victims.

Gallagher’s office is hoping that Florida residents in similar straits this year could tap into the remaining $104 million.