Most insurance on hold as Fay keeps moving

Aug 20, 2008

Herald Tribune--August 20, 2008

By Michael Pollick

Florida property owners who have claims resulting from Tropical Storm Fay may be writing smaller checks for the deductible portion of their bill than they would if the storm had developed into a hurricane on this coast.

Meanwhile, the ability for a home buyer to close on a mortgaged property, or for a policyholder to switch carriers or beef up their insurance, is still frozen in Fay’s meandering tracks. Figure several days more as the storm wanders its way toward the upper east coast of Florida and then maybe back again, possibly as a hurricane, experts say.

Most home insurance policies in Florida now state two different deductible levels. There is the normal deductible, often labeled "all other perils." Typically, this is $500 or maybe $1,000, meaning that is how much the home owner must contribute toward a repair before the carrier starts writing checks.

Then there is the hurricane deductible, which can be much higher — often multiples of the all-other-perils deductible.

"As of right now, there are no hurricane deductibles that apply, because the storm has remained as a tropical storm," said Ed Domansky, a spokesman for the Office of Insurance Regulation.

Under Florida law, insurance carriers can only offer four options for a hurricane deductible on a single-family home — $500 or one of three percentages based on the value of the structures: 2 percent, 5 percent or 10 percent.

A 5 percent deductible on a $100,000 house would be $5,000, so the distinction is crucial.

"In the current scenario, the storm was labeled only a tropical storm; the all-other-perils deductible applies to this wind storm, not the hurricane deductible," Domansky said.

A spokesman for the Florida Association of Insurance Agents in Tallahassee concurred.

"This never reached hurricane status," Scott Johnson said. "We believe that the non-hurricane deductible would apply."

While the storm caused very little damage in Charlotte, Sarasota or Manatee counties, the distinction is important to many other Floridians.

"There will be claims, and thousands of them," said Johnson of insurance agents association.

When a storm strikes Florida, or even puts the state into watch or warning mode, most carriers stop writing policies until after the storm is a memory.

Each carrier follows its own internal guidelines, but in general, the carriers will not be allowing changes "until 72 hours after the hurricane watch or warning has been lifted," Johnson said.

Many carriers follow the lead of Citizens Property Insurance Corp., the state-backed carrier, on writing or not writing coverage.

Citizens is being careful: "Given the fact that the track on this storm takes it back into Florida at present the chances are the restrictions would remain for at least several days," said Citizens spokesman John Kuczwanski.

That could mean Friday or Monday, depending on how long Fay meanders through the state. Consumers can keep track of that on Citizens’ Web site, In the top left corner of the page is a box labeled "Storm Season 2008." Underneath that it currently states: "Storm Restrictions. Status – No Bind!"

But some carriers are already willing to write policies.

"From our assessment now, it looks like it is primarily a rain event," said Todd Triano, vice president of loss prevention at AIG Private Client Group, which insures high-net-worth homes, cars and yachts. "We are actually writing right now."