UPDATED: Aug 23, 2013
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In the wake of Tropical Storm Sandy, insurance companies have been pushing to have the storm reclassified as a hurricane, because it would open up the hurricane deductible clause in many of their policies. The result could be millions more owed by policy holders before the insurance company would have to pay a dime.
In a press conference on Nov 11th, Senator Chuck Schumer of New York warned that insurance companies better not try to lobby for the change. “The insurance industry will pay every dollar for every legitimate claim in the wake of Sandy.”
The hurricane deductible clause kicks in if a storm hits landfall with winds at or above 74 miles an hour. When this happens, home damage falls under the hurricane clause, which requires homeowners to pay anywhere from 1% to 10% of the value of the property before the insurance company comes in.
Since the storm was downgraded before it hit landfall, it was classified as a tropical storm. This means that policy holders would only be required to pay their standard deductible, then the insurance companies cover the rest.
Senator Chuck Schumer added, “Insurance companies shouldn’t try to alter reality to save money on the backs of homeowners.”