Homeowners should be wary of property insurers trying to charge percentage deductibles for damage caused by Sandy, the hurricane-turned-post-tropical-cyclone, according to a bulletin released Tuesday by the Maryland Insurance Administration.
Only if the National Hurricane Center of the National Weather Service issues a hurricane warning for Maryland can property and casualty insurance carriers charge a percentage deductible — instead of the more familiar flat-rate deductible — for damage done by a hurricane or other storm, according to Maryland law.
The National Hurricane Center did not issue a hurricane warning for Maryland before Sandy hit. Therefore, most homeowners should be charged a flat rate “dollar deductible” on their property insurance claims, not a deductible that is calculated as a percentage of the total value of the policy.
“This is positive for consumers,” said Vivian Laxton, a spokeswoman for the insurance administration.
Flat-rate, standard deductibles — $500 or $1,000, for instance — are normally lower than percentage deductibles. If a home is insured for $100,000, a 2 percent deductible would be $2,000.
Last year, a hurricane warning was issued for Maryland prior to Hurricane Irene, allowing percentage deductibles to kick in, Laxton explained. That surprised a lot of homeowners when they submitted claims and were faced with deductibles that were much bigger than expected, she said.
Laxton said Wednesday that the state had not yet received complaints about insurers attempting to charge percentage deductibles. “It’s too early,” she said.