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Understanding “Hurricane” Deductibles!

By November 3, 2012 May 7th, 2019 No Comments

In the last 24 hours, we’ve received a lot of inquiries from folks who have misunderstood the recent press release from PA Governor, Tom Corbett.    For every one person that asks, there are usually 9 more who haven’t yet gotten around to asking.   So, let’s just talk about it now.

First off, if you have an ERIE Insurance policy, you may not even know what a “hurricane” deductible is.  At present, our PA homeowner policies do not utilize one.  You’ll see a line on your policy declarations that says “Section I Deductible” with a dollar amount beside it. Many people choose $500 or $1,000 but many other options are available.  Depending on the type of policy you’ve chosen, various perils will be covered.  However, let’s talk about my policy.  For the one I’ve chosen (our best one, of course!) I would experience the same deductible of $2,500 whether I have a loss from fire, lightning, theft OR hurricane.  That’s the amount I chose, that’s the amount I would bear when I submit my claim.  (Tip:  the higher the deductible, the lower the premium)

However, some other companies have designated a separate deductible for hurricanes or “tropical cyclones” and you can actually see it on those declaration pages if you look closely.   Here’s an example.

When you look at it, you’ll see this policy has a $1,000 deductible for the other perils, but a $7,424 one for “tropical cyclone” claims.  See it?  It’s an odd number, but if you do the math, you’ll see that it works out to be 2% of the amount of the dwelling (home).  See the home value of $371,236?   Multiply that by 2% and you’ll get $7,424.

Let’s use this printout as our example.  What Governor Corbett has suggested is that the $7,424 deductible would be replaced by the regular policy deductible of $1,000 for a claim resulting from Hurricane Sandy.   (You need to look at your own policy closely to know what deductibles apply to your situation.  If you are unsure, contact your agent for clarification)

Many folks have read the news articles and questioned whether he was waiving, wiping, or eliminating the policy deductible entirely.  They’ve wondered if their deductible would now be zero.  No, that is not the case.   However, instead of bearing the higher $7,424 they would bear the lower one of $1,000.

You need to understand your policy so that you are comfortable with how it responds during a loss. Talk with your agent and be honest about your comfort zone in terms of finances.  If you don’t have an agent with whom you can talk, please consider us!   We’re here to explain, we’re here to help you plan.  We’re here to help explain what can sometimes seem confusing.

To read the press release:  http://www.prnewswire.com/news-releases/governor-corbett-announces-hurricane-deductibles-will-not-be-applied-to-sandy-related-insurance-claims-176820081.html

Find us at www.insurancechix.com or www.hosfeldinsurance.com   Or, live at 19 E Main St., Macungie!    610-530-0304