The storm has passed and the recovery efforts have begun, but the devastation inflicted by Sandy will undoubtedly be felt for years to come. Truth be told, for many, if not most residents of New Jersey and its neighboring states, the effects of Sandy will be permanent.
In an unprecedented move, Governor Christie took action by signing an executive order, endorsed by the Department of Banking and Insurance. The order mandates that insurers refrain from imposing any special “hurricane” deductibles for damage caused by Sandy in New Jersey. It appears this step was taken to clarify any potential confusion that could have resulted from the change in classification of Sandy as it approached land.
The test in New Jersey to trigger the application of a special hurricane deductible is two-fold. First, the storm has to be a named hurricane and second, it has to have sustained winds in excess of 74 miles per hour. Although Sandy was considered a hurricane for most of its journey up the eastern seaboard, the National Weather Service downgraded it to a post-tropical storm shortly before it made landfall in New Jersey.
The consequences on policyholders is tremendous. Special hurricane deductibles are usually established by calculating a percentage (for example 5%) of the property’s insured value. This could potentially result in the imposition of deductibles of tens of thousands of dollars. Clearly the difference between paying a $1,000.00 deductible and a $20,000.00 deductible will have a major impact on those affected.
This is a very favorable outcome for policyholders and one which will hopefully ease the insurance claim filing process. However, it is always advisable to have an attorney, well versed in reviewing insurance policies and negotiating with insurance carriers, review your claim to make sure you are getting all that you are entitled to receive. In times like this when the insurance industry is overwhelmed with claim filings, it is easy for endorsements and other policyholder protective provisions to be overlooked. It is imperative for policyholders to be proactive in seeking help to protect their investments.
Tara A. Speer and Thomas J. Pryor work in Stark & Stark’s Lawrenceville, New Jersey office concentrating their practice in Insurance Coverage & Liability issues. For questions, or additional information, please contact Ms. Speer or Mr. Pryor.