Fla. Insurers Often Waive Multiple Deductibles

September 29, 2004

Many insurance companies are waiving additional deductibles for people who’ve suffered losses from more than one hurricane.

Hurricane Jeanne’s path poses the grim prospect of triple insurance deductibles for people who were hit first by Charley and Frances, but the state has stepped in to help some of those facing double or triple hits.

Treasurer Tom Gallagher said more than 1,000 people have called the Department of Financial Services’ hot line to say they faced double deductibles. Of those, 160 remain unresolved, Gallagher said.

Gallagher doesn’t think the 1,000 callers represent everyone who may have multiple deductibles looming, and he urged people to call the department for help.

Gallagher was in Jeanne-damaged areas Monday and Rep. Bob Allen, R-Merritt Island, said he passed along names of people in his district worried about multiple deductibles.

The Department of Financial Services has “been able to intervene. (Insurance companies) see the handwriting on the wall,” Allen said of the difficulties, both practical and political, posed by multiple deductibles.

In many cases, adjusters haven’t gotten to damaged property before the next hurricane hit.

Allen saw Hurricane Jeanne compound problems for people in his Brevard and Orange county district. “I’ve got a list of names and it’s grown. This storm made it even more of a problem,” Allen said.

“Those insurance companies that hadn’t cut a check, they’re letting it go as one event,” Allen said.

State Farm Insurance spokesman Tom Hagerty said that if adjusters didn’t make it out to evaluate homes damaged by one storm before another hit, generally it would be considered as one claim. It would be difficult to figure out what damage was caused by which storm.

If a homeowner’s roof is damaged by Hurricane Charley and Hurricane Frances caused further damage to the roof, adjusters would generally put that under one claim, he said.

However, if Hurricane Charley damaged the roof and Hurricane Frances caused a tree to fall on a shed — that would be considered two separate claims with two separate deductibles, he said.

“We are looking at it case-by-case,” Hagerty said.

For the industry, the four hurricanes that have hit Florida represent an estimated $20 billion in insured losses. Jeanne, Gallagher said Tuesday, is estimated to have $6 billion in losses. More than 1.5 million claims have thus far been filed for all four hurricanes.
The state’s catastrophic insurance fund, with $6 billion in cash on hand heading into this hurricane season, will be tapped for, at most, $3.5 billion, Gallagher said. Private insurance companies must have a combined loss of $4.5 billion with each storm before the CAT fund begins paying out.

“This really vindicates the unpopular things we did over the last 10 years,” said Sam Miller, executive vice president of the Florida Insurance Council. “It vindicates the rate increases, it vindicates creation of the CAT fund, it vindicates the deductibles. Without those things, companies would be going bankrupt right and left.”
This year’s horrendous hurricane season has lawmakers looking at further changes to insurance regulation.

Rep. Randy Johnson, R-Celebration and chair of the House Finance and Tax Committee, proposes insurance legislation. Among the ideas he has floated are a sales-tax funded trust fund to help financially strapped people pay deductibles and an annual cap on those deductibles.

It’s likely lawmakers will meet in special session in December and address at least some hurricane issues.

Gallagher says he favors regulations that would allow at least the option to buy higher-premium insurance that doesn’t include the hurricane deductibles.

“We need to wait until the end of the hurricane season,” Gallagher said of a final list of proposals. “We’re continuing to work with any legislators.”

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