What's happening
This bill requires the creation of uniform standards for when hurricane windstorm deductibles are triggered in homeowners insurance policies.
Why it matters
Reduces confusion for homeowners. by requiring clear, consistent standards for when hurricane windstorm deductibles apply, making it easier for policyholders to understand their coverage and financial responsibility after a storm.
Limits insurer discretion and variability. in triggering windstorm deductibles, potentially preventing insurers from applying these deductibles in inconsistent or overly broad circumstances.
Accelerates implementation of protections. by mandating that the superintendent of insurance issue these regulations within 180 days, using emergency procedures if necessary, ensuring homeowners benefit from clearer standards sooner.
Applies changes promptly to existing policies. at their next renewal, so both new and current policyholders will see the impact without waiting for lengthy phase-ins, increasing the likelihood of immediate and widespread consumer protection.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Homeowners with hurricane windstorm deductibles
The bill would require standards aimed at making the events that trigger these deductibles as uniform as possible.
Insurers writing homeowners and dwelling fire policies
The bill would subject hurricane windstorm deductible triggers to regulatory standards and allow resulting policy changes at initial or subsequent annual renewal.
State insurance superintendent
The bill would require the superintendent to adopt hurricane windstorm deductible standards within 180 days of the bill’s effective date.
Headline styles
Clarify Hurricane Deductible Notices
Plain English, a few words. Used as the page title.
Sponsors
3 Co-sponsors
History
- Referred to insurance
- Referred to insurance
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3324
2019-2020 Regular Sessions
IN SENATE
February 5, 2019
Introduced by Sens. LAVALLE, BROOKS, KAMINSKY, RANZENHOFER -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to homeowners insurance deductibles triggers
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 3445 of the insurance law, as added by chapter 44 of the laws of 1998, is amended to read as follows:
§ 3445. Windstorm insurance notice; deductible trigger standards. (a) The superintendent shall by regulation establish disclosure requirements with respect to the operation of any deductible in a homeowner's insurance policy or dwelling fire personal lines policy which applies as the result of a windstorm. Such regulations shall prescribe the form of a notice to be provided by an insurer to an insured. The notice shall explain in clear and plain language the amount of the deductible, the circumstances under which the deductible applies and any other matters which the superintendent, in his or her discretion, shall deem necessary or appropriate.
(b) The superintendent shall by regulation establish standards for hurricane windstorm deductibles, which create, to the greatest extent possible, uniformity in the operation of such deductibles with respect to the triggering event.
The superintendent shall promulgate such regulations by emergency adoption or otherwise, within one hundred eighty days of the effective date of the chapter of the laws of two thousand nineteen which added this subsection. Notwithstanding paragraph seven of subsection (a) of section three thousand four hundred twenty-five of this article, any changes in a homeowner's insurance policy or dwelling, fire, or personal policy registered as a result of the adoption by the superintendent of regulations under this section, may be applied to such policies on the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03722-01-9
S. 3324 2
policy's initial renewal date or the policy's next annual renewal after the effective date of such regulations.
§ 2. This act shall take effect on the ninetieth day after it shall have become a law, and shall apply to all policies issued or renewed on or after the one hundred eightieth day after the adoption of the regulations required in section 3445 of the insurance law, as amended by this act.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to homeowners insurance deductibles triggers
Purpose
To help promote better understanding of the applicability and amount of hurricane windstorm deductibles in homeowners and dwelling fire poli- cies. To establish reasonable standards for the operation of hurricane windstorm deductibles.
Summary of provisions
This legislation amends section 3445 of the insurance law to require insurers that issue homeowners' and dwelling fire policies with catastrophic windstorm deductibles to provide notice to their policy- holders, upon policy issuance and renewal, which clearly explains the amount and the applicability of the deductible, and to send separate notice prior to hurricane season, in accordance with standards estab- lished by the superintendent in regulation. The bill would require the superintendent to establish reasonable standards for uniformity in the triggering and operation of hurricane windstorm deductibles to promote clear understanding and a reasonable and actuarially appropriate appor- tionment of hurricane risk between insurers and policy holders.
Read the full memo (728 words)
Existing law
Section 3445 of the insurance law requires the superintendent to estab- lish disclosure requirements in regulation with respect to the operation of windstorm deductibles in homeowners' and dwelling fire policies. The regulation sets standards for such notice on the declarations page and in a separate notice accompanying all new and renewed policies.
Justification
Legislation is required to ensure that insurance consumers fully under- stand the terms of the catastrophic windstorm deductible in their home- owners and dwelling fire policies. In particular, consumers need to understand the increased exposure they are assuming.
Currently, insurers are utilizing a wide variety of windstorm deductible programs in their homeowners and swelling fire policies. Windstorm deductibles, which can range from 1% to 7.5%, are usually expressed as a percentage of the homeowners' Coverage A limit (the value of dwelling structure). A 6% deductible on a $500,000 would result in the policy- holder having to pay the first $30,000 of damages sustained to the home during a windstorm.
While windstorm deductibles are expressed as a percentage, most policy -holders are used to relatively low deductibles expressed as a dollar amount (i.e., $250, $500, $1,000). Percentage deductibles are generally found in health insurance programs, where policyholders are required to pay a percentage of a medical claim. Therefore, policyholders can easily misconstrue a 6% windstorm deductible as requiring them to pay only 6% of the damages sustained, rather than up to 6% of the value of their home. Additionally, while the deductible is often described in terms of a percentage of the Coverage A limit, it typically applies not only to the losses to the dwelling structure, but also to additional structures on the premises (Coverage B) and to the contents of the home (Coverage C).
Requiring insurers to issue a notice to policyholders which explains in plain language the amount and circumstances in which the deductible applies will help policyholders better understand these various and complicated deductible provisions. Also, consumer confusion regarding the amount and applicability of their percentage deductibles will be further reduced by requiring the deductible to be expressed, on the policy and declarations page, as a dollar amount of each coverage part to which it applies.
Another area of confusion for consumers is understanding the event which activates or "triggers" the applicability of their windstorm deductible. Currently, insurers' deductible programs contain a variety of 'trigger- ing' events. Since the triggering event will determine whether a wind- storm deductible applies to a policyholder's loss, it is crucial that it be fair and reasonable to both the policyholder and the insurer.
Uniform standards for and notice explaining the operation of catastroph- ic windstorm deductibles are necessary to promote easier comparison between different insurers' options, and to ensure clear understanding of the extent of policyholder exposure under these options. The require- ments for understandable and fair standards will ensure that catastroph- ic windstorm deductibles are reasonable, actuarially appropriate and applied in the proper circumstances.
Legislative history
2017-18 S.2062 A.6665; 2015-16 S/253A/A.7537A; 2013-14 S.2032/A.2729; 2011-12 S.3387A; 2008 S.6042
Fiscal implications
None to the State.
Effective date
This act shall take effect on the ninetieth day after it shall have become a law, and shall apply to all policies issued or renewed on or after the one hundred eightieth day after the adoption of the regu- lations required in section 3445 of the insurance law, as amended by this act.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.