NY State Weighs New Hurricane Deductible Regulations

New York homeowners may soon get more clarity and protections on hurricane deductibles for property insurance. New York insurance regulators are weighing rule changes that would require home insurance policies to clearly state their hurricane deductible dollar amounts, when a hurricane deductible applies, and what parts of the policy the deductible applies to.

The state’s Department of Financial Services (DFS), which oversees the New York insurance market, has published a draft of the proposed regulations to provide an opportunity for public comment.

How hurricane deductibles cost homeowners money

New York is one of 19 coastal states that allow home insurance companies to charge a separate deductible for damage from a hurricane, according to the Insurance Information Institute. Hurricane deductibles are based on a percentage of a policy’s dwelling coverage — typically 1% to 5%.

That percentage may seem modest until an insurer applies the deductible to a storm-related loss.

Consider this example: A homeowner has a policy with $300,000 in dwelling coverage and a 5% hurricane deductible. A named Category 2 storm causes $100,000 in damage to the covered home. That 5% hurricane deductible would automatically shave $15,000 off the homeowner’s possible claim payout.

And, if the insurer “stacks” deductibles — applying both a standard home insurance deductible and the hurricane deductible — the homeowner’s out-of-pocket expense would be even greater. Standard deductibles are also usually a percentage of the home’s insured value, ranging from 1% to 10%. Add a 5% standard deductible to the above hurricane deductible example, and the homeowner faces out-of-pocket costs of $30,000.

The average annual cost of home insurance in New York was $2,732 in 2024, according to Insurify’s Insuring the American Homeowner report.

Insurify projects rates will increase 5% in the Empire State throughout 2025, pushing that average to $2,855 by the end of the year.

Proposed changes to NY hurricane deductible rules

The proposed amendments to existing insurance law in the state would require New York home insurers to:

• Show both the percentage and actual dollar amount of a policyholder’s hurricane deductible on the declarations page, near non-hurricane deductible information.

• At renewal time, notify policyholders of the hurricane deductible and clearly explain what it means.

• Provide “a plain-language explanation” of what coverage parts the hurricane deductible applies to.

• Give “a clear explanation” of the hurricane category that would trigger a hurricane deductible.

• Clearly explain that the hurricane deductible applies only to losses that directly stem from wind damage no more than 12 hours before a named hurricane makes landfall and no more than 12 hours after the last hurricane watch or warning for the storm.

• Cap hurricane deductibles at 5% of dwelling coverage.

• Apply only one deductible to any loss, although they can choose to apply the higher deductible.

What’s next: 60 days for written comments

After April 10, the DFS may publish the proposal in the State Register for a formal comment period of 60 days. After receiving and evaluating written feedback, the DFS could move to implement the rule changes.

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