Hurricane Deductibles: From the State…

NEW JERSEY POLICYHOLDER

HURRICANE PERCENTAGE DEDUCTIBLE CONSUMER GUIDE

A deductible is the amount for which the insured is responsible for each covered loss on an insurance policy. Deductibles have evolved throughout the years to also apply to very specific events like a hurricane that have the potential to cause huge amounts of damage resulting in catastrophic losses for the insurance industry.

We have implemented a hurricane percentage deductible program for use specifically with a hurricane event.

Hurricane Percentage Deductibles Frequently Asked Questions

Does the hurricane percentage deductible apply everywhere in the state of New Jersey?

No, a hurricane percentage deductible is only required in certain areas based on the insured property’s location related to bay or coastal waters as determined by the company’s proprietary tool.

How can I tell if a hurricane percentage deductible applies to my policy?

Your policy may contain two deductibles, a Section I deductible and a hurricane percentage deductible. Both deductibles are shown on your policy declaration page.

How are the hurricane percentage deductible amounts determined?

In the areas where a hurricane percentage deductible is required, it is based on the insured property’s location related to bay or coastal waters as determined by the company’s proprietary tool.

 

How is the application of the hurricane percentage deductible triggered?

This deductible applies in the event of direct physical loss to property covered caused directly or indirectly in the event of a hurricane named by the National Weather Service from which sustained winds of 74 miles per hour or greater have been measured in New Jersey by the National Weather Service (regardless of whether the sustained hurricane force winds reach the risk insured under the policy and shall replace any other deductible in that event.

In no case will this deductible be less than the Section I deductible shown in the policy Declarations. The duration of the hurricane includes the time period:

  • Beginning 12 hours prior to the first time that sustained hurricane force winds of 74 miles per hour or greater have been measured anywhere in New Jersey by the National Weather This requirement will apply regardless of whether the Sustained hurricane force winds reach the risk insured under the policy;
  • Continuing for the time period during which the hurricane conditions exist anywhere in New Jersey;
  • Ending 12 hours after the last time the hurricane force winds of 74 miles per hour or greater have been measured anywhere in New This requirement will apply regardless of whether the sustained hurricane force winds reach the risk insured under the policy.

EXCEPTIONS:

This hurricane percentage deductible amount does not apply to loss under Coverage D – Loss Of Use. Instead, the deductible amount that applies to loss under Coverage D will be the same as the deductible amount that would have been applied to the peril of fire.

In the event that an incurred loss to Dwelling – Coverage A, Other Structures – Coverage B and Personal Property – Coverage C is under the hurricane percentage deductible, no payment will be issued. If within the same incurred loss, the loss under Coverage D – Loss Of Use is over the Section I deductible, that portion of the loss will be paid minus the Section I deductible amount.

Illustration:

If there is a covered loss caused by a hurricane, how is my hurricane percentage deductible amount calculated?

To see how much your deductible would be, multiply the hurricane percentage deductible shown on your declaration page by the Coverage A Dwelling limit of liability. If the calculated amount is higher than the Section I deductible, then the hurricane percentage deductible applies. The higher of the two deductibles will always apply.

      Here is an example where the policy contains a 2% Hurricane Percentage Deductible: Example: Coverage A is $100,000. Section I deductible is $250.

The Losses Incurred are:

  • Coverage A   $7,500
  • Coverage B   $1,350
  • Coverage C   $3,000
  • Coverage D  $660

 

Total of the Loss for Cov A, B & C                      $11,850
% Deductible Amount – $2,000
Loss Payment                                                         $9,850
Cov D Loss Amount  $660
Section I Deductible                                              – 250
Cov D Loss Payment  $410
Final Loss Payment                                               $10,260

Is the hurricane percentage deductible something that can be removed from the policy?

If your insured property is located in an area from bay or coastal waters where a hurricane percentage deductible is required as determined by the company’s proprietary tool, the hurricane percentage deductible is mandatory it cannot be removed.

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